After the massive rally on Friday, it will be interesting to see how the markets trade this week. Some anecdotal Wall Street data indicate that money managers and traders are still very cautious, and the utility and telecom sectors still lead the S&P 500 by a wide margin. One thing is for sure, and Friday’s strength backs up this notion, there is a lot of cash on the sidelines and a lot of short pressure still leaning on stocks.
A new research report from Jefferies focuses on a set of growth stocks for this week that have big upside. While they may be a touch aggressive for some growth investors, those with a higher risk tolerance may have a big interest. We selected four with some serious upside potential.
Anacor Pharmaceuticals
This biopharmaceutical company has been hit hard as upheavals in the specialty pharmaceutical area have proved damaging to all. Anacor Pharmaceuticals Inc. (NASDAQ: ANAC) is focused on discovering, developing and commercializing novel small-molecule therapeutics derived from its boron chemistry platform. Anacor’s first approved drug, Kerydin (tavaborole) topical solution, 5%, is an oxaborole antifungal approved by the U.S. Food and Drug Administration (FDA) in July 2014 for the topical treatment of onychomycosis of the toenails.
In July 2014, Anacor entered into an exclusive agreement with Sandoz, a Novartis company, pursuant to which PharmaDerm, the branded dermatology division of Sandoz, distributes and commercializes Kerydin in the United States.
Jefferies notes that the company reported disappointing earnings last week as the Kerydin numbers came in lower than expected, but the firm also notes that Crisaborole, an investigational non-steroidal topical PDE-4 inhibitor for the potential treatment of mild-to-moderate atopic dermatitis and psoriasis, is still the big story at the company, with FDA approval expected in 2017.
The Jefferies analysts recently attended the American Academy of Dermatology conference. They mentioned that there was a buzz for various new AD therapies, including Crisaborole. They feel that Crisaborole peak sales will be $1 billion or more, and that was reinforced based on their discussions and the new data.
The Jefferies price target for the stock is $105, and the Thomson/First Call consensus price target is $143.33. The stock closed Friday at $63.55.
[recirclink id=319917]
BioMarin Pharmaceuticals
This is one of Wall Street’s favorites, and recently announced earnings were outstanding. BioMarin Pharmaceuticals Inc. (NASDAQ: BMRN) develops and commercializes innovative biopharmaceuticals for serious diseases and medical conditions. The company’s product portfolio includes five approved products and multiple clinical and preclinical product candidates.
Over the past decade, BioMarin has become one of the top orphan drug companies, and it looks poised to stay there. The company is expected to post around $875 million in revenue this year and possibly around $1.1 billion next year following the approval of Vimizim, an enzyme replacement therapy for Morquio syndrome. BioMarin had raised its guidance for Vimizim to $200 million to $220 million from a prior range of $170 million to $200 million.
The Jefferies analysts are positive on the PEG-PAL Phase 3 data, which should be released soon. They also expect the full results to be released next month at the Society for Metabolic Disorders conference. They also met with management recently and come away even more positive on the data and the fact that the company thinks there is a $1 billion potential. This could also raise the price tag for the company to the $25 billion range, expensive for any takeover-minded suitor.
Jefferies has a $120 price target, while the consensus price objective is $118.89. The stock closed on Friday at $88.27.
Starbucks
The retail giant has traded sideways for the most part since last fall and could be poised to breakout. Starbucks Corp. (NASDAQ: SBUX) operates as a roaster, marketer and retailer of specialty coffee worldwide. Its stores offer coffee and tea beverages, packaged roasted whole bean and ground coffees, single-serve and ready-to-drink coffee and tea products, juices and bottled water.
The company also licenses its trademarks through licensed stores, as well as grocery and national foodservice accounts. The company offers its products under the Starbucks, Teavana, Tazo, Seattle’s Best Coffee, Evolution Fresh, La Boulange, Ethos, Starbucks VIA, Starbucks Doubleshot, Starbucks Refreshers and Starbucks Discoveries Iced Café Favorites brand names.
Jefferies sees 15% to 20% earnings growth over the next several years. They analysts also note that the price-to-earnings gap between Starbucks and McDonald’s has fallen to just eight points, the lowest level in years.
Starbucks shareholders are paid a 1.4% dividend. The Jefferies price objective is $70. The consensus target is posted at $68.26. The stock closed on Friday at $57.59 per share.
WisdomTree Investments
This company is the real up-and-comer in the exchange traded fund (ETF) business and it is carving itself out an outstanding share with many specialized ETF offerings. Wisdom Tree Investment Inc. (NASDAQ: WETF) continues to benefit from the movement toward ETFs. This is especially true with the specialized currency hedged products, with the potential for significant uptake in interest rate hedged products.
Wisdom Tree is run by Jonathan Steinberg, the son of famous Wall Street financier Saul Steinberg. He is also married to Maria Bartiromo, who became very famous on CNBC and now works for the Fox Business Network. Steinberg has a long and very distinguished ETF background, going back to the product’s infancy.
The company remains a very possible takeout candidate, and some analysts cite companies like mutual fund giant Franklin Resources as a potential buyer. With sales of traditional mutual funds losing share to index and ETF products, the company could be an easy bolt-on for a big asset manager to secure a solid place in the arena. The company launched five new products already this year.
WisdomTree investors receive a 2.49% divided. The $15.50 Jefferies price target is higher than the consensus figure of $13.70. Shares closed Friday at $12.84.
[recirclink id=320007]
The Jefferies analysts have four solid stocks for aggressive investors to consider, all of which have good upside potential and a very solid core business. Plus, current entry points still remain very compelling.
Top Gaining Stocks
Top Losing Stocks