Why top analysts rely on stocks like Alcon & Upstart
The Alcon logo can be seen on Monday 4th January 2010 at the company’s headquarters in Huenenberg, Switzerland.
Peter Frommenwiler | Bloomberg | Getty Images
At the end of the first quarter of 2021, analysts take a look at the stocks in their coverage universes and assess where they stand in the long term.
Against this backdrop, there is increased unemployment and a vaccine roll-out that is still at an early stage. Over two-thirds of adults in the United States are not yet receiving a single dose.
In such uncertain times, one approach to finding stocks ready for long-term growth is to follow the recommendations of analysts with a proven track record.
Using TipRanks’ analyst forecasting service, which seeks to identify the top performing analysts on Wall Street based on success rate and average return per rating, we reviewed the latest stock picks from these top analysts.
Here are the five most popular stocks among analysts right now.
ALX Oncology is an immuno-oncology company developing therapies to block the CD47 checkpoint pathway for cancer patients.
Despite the recent sell-off, HC Wainwright’s top analyst Swayampakula Ramakanth reiterated a buy rating and a target price of USD 100 (59% upside) on March 22nd.
Ramakanth shares with clients that the negative investor sentiment was due to an adverse top-line ad from the Phase 3 trial of tilsotolimod, a TLR9 agonist from Idera. It should be noted that on March 4, ALX Oncology entered into a 50/50 collaboration with Tallac Therapeutics to develop a TLR9 agonist antibody conjugate that targets the signal regulatory protein alpha (SIRPα), SIRPα TRAAC, as Cancer treatment targeting an IND is expected to be filed by the end of 2022.
“In our opinion, the market has overreacted as we believe that the two programs use completely different mechanisms of action, even though both programs use TLR9 agonists. Due to the early phase of the program, the evaluation of SIRPα TRAAC has not yet been included in the ALXO- Price included We therefore believe that last Friday’s sell-off is an attractive entry point for long-term investors, “commented Ramakanth.
In addition, the analyst highlights the fact that ALXO provides complete results for ALX148, its high-affinity fusion protein that binds to CD47, from Phase 1b studies in patients with gastric and gastro-esophageal transitional cancer (GEJ) and head and neck cancer – Squamous cell carcinoma will present cell carcinoma (HNSCC) in mid-2021 or 2H21. The therapy is being evaluated in combination with Roches Herceptin and Eli Lillys Cyramza for HER2 + gastric / GEJ cancer and Merck’s Keytruda for HNSCC.
With clinical data showing promise, “ALX148 data updates in both HNSCC and gastric / GEJ cancers could be short-term catalysts for the stock,” said Ramakanth. Additionally, the phase 1 data for ALX148 in high-risk MDS and AML in 4Q21 and 1Q22, respectively, could reflect additional catalysts, the analyst said.
Ramakanth ranks 117th on TipRanks’ Top Performing Analysts list and has an average return of 36.3% per valuation.
In response to Semtech’s Beat & Raise quarter, Oppenheimer’s Rick Schafer gave the semiconductor company a thumbs up. To this end, the five-star analyst kept a buy rating and a price target of $ 80, which means the upside is 23%.
Looking at the details of the print, revenue of $ 165 million and earnings per share of $ 0.51 beat consensus estimates of $ 158 million and $ 0.48, respectively. Most notably, however, LoRa ended 2020 at $ 88 million (up from $ 74 million).
“We see these achievements further validate LoRa and its ecosystem. SMTC also announced a partnership with Webee in connection with the outcome. The Webee deal will allow customers to easily connect LoRa devices to MSFT Azure. Provide LoRa cloud services.” from this year a contribution (2H-weighted) and the management expects that EOY will win more than 20 cloud customers “, said Schäfer.
Schafer also points out that adoption is growing as the public and private operators of LoRa rose to 150 and rose to 165 by the end of the year. In addition to LoRa, the analyst argues that 5G and DC will support the “accelerated growth story”.
“In our opinion, LoRa Cloud Services are ready to generate future benchmark profits. LoRa remains SMTC’s most important growth / upside driver with a potential for a 5-year CAGR of more than 40%. We remain long-term buyers,” explained Schäfer.
Schafer currently achieves a success rate of 76% and an average return of 22.3% per rating, making it 57th in TipRanks’ top analyst ranking.
Content creation and streaming company CuriosityStream just reported solid subscriber numbers for Q420. As of December 31, 2020, the company had a total of 15 million subscribers, up 50% over the previous year.
It should be noted that 75% of CURI’s DTC subscribers pay $ 20 for an annual plan and churn fell 25% year over year to an average lifetime of 30 months. Additionally, the launch of Discovery + on January 4 this year had no negative impact on CURI’s subscriber growth in the first quarter.
Needham analyst Laura Martin was impressed when the top analyst left her buy recommendation and price target of $ 25 unchanged. This price target indicates an upside potential of 79%.
“What we like best about CURI is that it is a streaming company with the majority of its revenue from companies around the world under 5-year contracts. This gives investors visibility and protection ahead of downside risks. For example, CURI stated that 80% of its annual sales forecast for 2021 is under contract and is very predictable, “explained Martin.
When it comes to total hours in the CURI library, around 30% are wholly owned by CURI, while 70% are licensed under contract terms of three to five years to maintain this mix. According to management, there has been no upward pressure on rights costs for licensed content.
Another thing that speaks for the company is that it closed two sponsorship deals in the fourth quarter that reflect a new source of income, says Martin. The analyst estimates these deals will increase sales by $ 5 million in 2021 and sales in 721 by $ 10 million to $ 10 million in 2022.
Martin ended up among the 65 top analysts recorded by TipRanks, achieving a success rate of 64% and an average return of 32% per rating.
After a big 4Q20 slap, Bank of America Securities analyst Nat Schindler upgraded Upstart, changing the rating from neutral to buy. As a further sign of his optimism, he raised the price target from USD 57 to USD 135. With this new target, the upside potential is 13%.
Revenue for the quarter significantly exceeded Street expectations, totaling $ 84.4 million, compared to the consensus estimate of $ 79 million. EBITDA of $ 15.5 million exceeded the estimate of $ 11.1 million. Although Upstart posted earnings per share of $ 0.00, analysts originally called for a loss of $ 0.07.
This impressive result was driven by a lower than expected impact of the Credit Karma adjustments in November, a high loan volume of 123,396 loans, a 57% year-over-year increase, and a higher conversion rate of 17.4% compared to 14.9% in fourth quarter 19 driven.
“We are encouraged by Upstart’s ability to achieve 39% growth in hard comps as it continues to validate Upstart’s value proposition for both banking partners and consumers. We believe that Upstart could see longer-term growth through recurring borrowers, and Comments on the solicitation suggest a robust banking partner pipeline for the future, “said Schindler.
Since the company’s debut in the public market in December, the company has signed three new banks, bringing the total number of banking partners to 15. In addition, the company has just announced that it will acquire Prodigy, an automotive retail software company.
“While we do not anticipate any significant revenue contribution in 2021, we see the acquisition of Prodigy as an important step forward in Upstart’s expansion into the adjacent TAM for auto loans (estimated at $ 626 billion),” commented Schindler.
Going forward, management estimates fiscal 21 revenue will be $ 500 million, compared to the consensus estimate of $ 427 million.
According to TipRanks, Schindler has a success rate of 59% and an average return of 22% per rating.
In a recent research report, BTIG analyst Ryan Zimmerman writes that multiple product initiatives, a recovery boost, and clarity on long-term goals should help investors “see 20/20 2021” when it comes to Alcon.
With this in mind, the five-star analyst has upgraded the rating to Buy, and the analyst has assigned the eye care provider a target price of $ 78 (13% upside potential).
Zimmerman acknowledges the fact that shares have lagged the S&P 500 since the company was spun off from Novartis in 2019, despite “showing healthy valuation and beating expectations for three of the last four quarters.” Some investors expressed concern about ALC’s ability to grow operating margins, with the pandemic also hindering the ophthalmic field more than other medical technology sectors.
Zimmerman replied, “However, ALC is entering FY21 with a litany of top-line riders and benefiting from the recovery momentum (which is evident in our polls and KOL appeals). We believe mgmt.” Bringing questions to bed “will be long-term goals on Capital Markets Day.”
Although the analyst recognizes that operating margins are a matter of concern, Zimmerman argues, “The issue is not if ALC will achieve an operating margin below 20, but when; we believe the difference will be a year or more (due to COVID) is not the case. ” It is unaffordable to own stocks that are expected to continue to outgrow the market, which will lead to an increase in operational leverage in the years to come. “
When it comes to key growth drivers in 2021, the analyst expects patients to return to ophthalmology and optometry visits, more people to look for optical solutions to the negative effects of longer screen time, cataract recovery, and refractive surgery volume AT-IOLs are set to continue, and hospital budgets are set to return in favor of surgical devices.
With a success rate of 62% and an average return of 34.7% per review, Zimmerman ranks 110th on the TipRanks list.