Anyone feeling dizzy from the recent market gyrations? Volatility is back on the menu in a big way. The past week saw strong moves in both directions, with the bears ultimately in control, culminating in Friday’s rout. After charging ahead for most of the year, the main indexes have been on the backfoot recently, with the market getting jittery over Omicron variant fears and the Fed’s hawkish turn. Friday’s seemingly disappointing jobs report further fanned the flames of doubt.
Nevertheless, even amidst the uncertainty, there are always opportunities for investors willing to seek them out.
The analysts at Raymond James have picked out 2 stocks which they believe are primed to jump higher, on the order of 60% or better. We’ve used the TipRanks platform to look up the latest data on those picks; turns out the Street sees plenty of upside too.
Cushman & Wakefield (CWK)
So let’s start with a real estate company. Cushman & Wakefield is a global player in commercial real estate services, and is one of the world’s largest such firms, with total revenue last year of $7.8 billion. The company’s revenue is supported by a large portion of annual recurring fees, but it is also exposed to market cyclicity. As a result, the stock is more likely to gain during the bull runs than more stable investments such as real estate investment trusts.
Year-to-date, C & W shares have gained 27%, outpacing the S&P’s 21% gain. The share gains have come as the top line has risen steadily through the year. Revenues in Q1 were reported at $1.9 billion; in Q3, revenues came in at $2.3 billion, also representing a gain of 20% yoy. Of the total quarterly revenue, $1.7 billion was incurred from fees, up 28% from the prior year. EPS for the third quarter was 34 cents, down from 50 cents in Q2 but up dramatically from the 4 cents reported in 3Q20.
Cushman & Wakefield is always on the lookout to expand in creative directions, and in October of this year the company announced a partnership with WeWork, the flexible shared workspace company. The partnership includes an investment by C & W of $150 million, and Cushman will be able to leverage leasing and project management to create new revenue streams.
Also in October, Cushman entered a joint venture with the commercial real estate finance company Greystone. The venture will see Cushman put $500 million into Greystone’s Agency, FHA, and Servicing businesses, for a 40% stake.
Covering CWK for Raymond James, 5-star analyst Patrick O’Shaughnessy writes, “We view Cushman’s current valuation to be highly attractive both on an absolute and relative basis, and we look for its pending investment in multifamily origination firm Greystone and partnership with WeWork as potential catalysts.”
O’Shaughnessy goes on to add that, “… despite an unclear medium-term outlook for office property demand, a rebounding global economy is driving brokerage activity higher and pointing towards further upside in 2022 and beyond.”
In line with these comments, the analyst upgraded his view of the stock from Outperform to Strong Buy, and set a $31 price target that implies an upside of 64% for the year ahead.
This stock holds a Moderate Buy rating in the Street’s consensus view, based on 3 recent reviews that include 2 Buys and 1 Hold. The average price target of $25.92 indicates a potential for 38% growth from the current share price of $18.83.
LianBio Sponsored ADR (LIAN)
The second stock we’ll look at is a Chinese biotech firm, LianBio. Unlike many other clinical-stage biotech researchers, this company is researching a varied portfolio of new medications in a wide range of fields. LianBio has clinical trials ongoing in the fields of respiratory, inflammatory, and cardiovascular disease, as well as in oncology and ophthalmology. The programs are undertaken in partnerships with other world-class biopharma companies.
The three leading programs in LianBio’s pipeline are in the areas of oncology, cardiovascular disease, and ophthalmology. The leading cardiovascular program is for mavacamten, first developed by Myokardia/Bristol Myers. Mavacamten completed a successful Phase 3 trial for the treatment of obstructive hypertrophic cardiomyopathy (HCM) in the US and a Chinese Phase 3 trial is set to go ahead during 1Q22.
Infigratinib leads the oncology program, indicated as a new treatment for gastric cancer and other solid tumor malignancies. LianBio is working with BridgeBio Pharma on the clinical trials, and has three studies ongoing. The drug has already been approved in 2nd line cholangiocarcinoma in the U.S.
The company’s most advanced program in ophthalmology is for TP-03, which was developed by Tarsus Pharmaceuticals for the eye disease demodex blepharitis. Lian-Bio has made an agreement with Tarsus for development and commercialization rights in China for the drug.
LianBio entered the US markets through an IPO on November 1 of this year. The shares opened at $16 each, exactly in the middle of the expected range, and the company raised $325 million on the sale of 20.31 million American depositary shares. Shares have made an inauspicious start, sliding by 26% since the first day’s closing price.
However, Raymond James analyst Dane Leone sees the three leading research programs – and especially the mavacamten program – as important keys to LianBio’s forward prospects. He outlines three points for investors to consider: “1) LianBio has a tiered collection of assets with three substantially de-risked drug candidates including mavacamten, TP-03, and infigratinib; 2) the company stands to rapidly grow revenues beginning 2025 with the expected approval of mavacamten, our projected leading revenue driver; and 3) the company has a diversified group of licensing partners, which grants it flexibility to pursue positive clinical outcomes while not relying too heavily on one indication or drug class.”
Regarding mavacamten, Leone is bullish on the company’s ability to commercialize, writing, “[LianBio] stands to start collecting revenue during 2024 at $45M with a step up to ~$320M during 2025.”
These comments back up Leone’s Outperform (Buy) rating on the stock, and his $27 price target suggests a huge upside of 168% from the current share price of $15.57. Leone’s is the first review on file for this biotech stock.
Other analysts see plenty of upside too; going by the $24.4 average target, shares are expected to rise by 142% over the coming months. With 2 additional Buys vs. 1 Hold, the stock boasts a Strong Buy consensus rating.
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