Bank of America has a strong reputation for keeping finger on the pulse of the financial world – and one of its key tools is the Global Fund Manager Survey, conducted monthly and seeking opinions from more than 200 hedge fund, mutual fund, and pension fund managers who hold a combined $645 billion in AUM. It’s the largest regularly conducted survey of its kind.
And BofA most recent findings show that Big Money is feeling confident. More than 90% of investors surveyed believe that 2021 will show a significant recovery from 2020, that asset allocations to stocks and commodities are at their highest in 10 years, and there’s a general belief that global growth is at an all-time high.
So, there is a general consensus that now is the time to invest. The only remaining question is, invest in what?
Wall Street pros argue there are early-stage companies that reflect promising opportunities, with the low share prices meaning you get significantly more bang for your buck. What’s more, even what seems like minor share price appreciation can result in massive percentage gains.
The bottom line? Not all risk is created equal. To this end, the pros recommend doing some due diligence before making an investment decision.
With this in mind, we used TipRanks’ database to find compelling penny stocks with bargain price tags. The platform steered us towards two tickers sporting share prices under $5 and “Strong Buy” consensus ratings from the analyst community. Not to mention substantial upside potential is on the table.
ObsEva SA (OBSV)
First up is a clinical-state biopharma company with a sharp focus on women’s health. ObsEva is working to develop and commercialize new therapeutics for women’s reproductive health issues – up to and including pregnancy.
The company’s lead drug candidate, linzagolix (branded as Yselty), is an orally administered GnRH receptor antagonist that has completed two Phase 3 studies, PRIMROSE 1 in the US and PRIMROSE 2 in both the US and Europe. The clinical trials enrolled 574 and 535 patients, respectively, and used doses of 100mg or 200mg to treat heavy menstrual bleeding associated with uterine fibroids. The results from both studies were positive, supporting Linzagolix’s favorable safety and efficacy profile.
In an update announced last month, ObsEva reported that, pursuant to Phase 3 results, the European Medicines Agency (EMA) had validated for review the company’s Marketing Authorization Application (MAA) for Yselty (100mg and 200mg). Potential MAA approval is anticipated in Q4:21. The drug is also slated to be the subject of a New Drug Application (NDA) that is due to be submitted to the FDA in Q2.
With shares changing hands for $3.80 apiece, Wedbush analyst Liana Moussatos sees an attractive entry point for investors.
“In our view, Linzagolix has the potential to achieve best-in class oral GnRH receptor antagonist status based on a flexible dosing regimen either with or without the add-back hormone therapy (ABT)—a key differentiator from other GnRH receptor antagonists… Based on the positive PRIMROSE 1 and PRIMROSE 2 primary endpoint results for YSELTY®/UF and additional follow-up data, we project annual sales of more than $750 million in 2027 for Linzagolix/UF,” Moussatos opined.
To this end, Moussatos rates OBSV a Buy along with a $28 price target. Should her thesis play out, a potential twelve-month gain of ~643% could be in the cards. (To watch Moussatos’ track record, click here.)
Overall, ObsEva has impressed its observers, as shown by the unanimous Strong Buy consensus rating on the shares, based on 3 recent Buy reviews. With a return potential of 342%, the stock’s consensus price target stands at $16.67. (See OBSV stock analysis on TipRanks)
BELLUS Health (BLU)
The second stock we’re looking at, BELLUS Health, is also a clinical stage biopharma research company – but the focus here is on an issue that few of us ever think about. Hypersensitivity – the state of being highly, or even excessively, sensitive to environmental or foreign stimuli – can cause a range of conditions from a chronic cough to serious disorders.
Sometimes, the less severe chronic symptoms can be the worst. Chronic cough and chronic pruritus (itchy skin) are mild to moderate symptoms that can triggered by a range of factors – but when the symptoms don’t go away, they can have a disproportionately negative impact on the quality of life. BELLUS’ lead drug candidate, BLU-5937, is undergoing studies of its efficacy in the treatment of these symptoms. BLU-5937 is a highly selective PsX3 antagonist, working on the P2X3 receptor in the cough reflex pathway.
The current clinical trial is a Phase 2b study, the follow-up to the Phase 2 RELIEF trial. The RELIEF trial enrolled 68 patients in the US and UK, of whom 52 completed two test periods. The trial showed a statistically significant cough count reduction in patients with a higher baseline count. The Phase 2b studies, are now enrolling and dosing patients, with interim results expected by mid-year and top line results expected to be published in the fourth quarter.
Singing the healthcare name’s praises is RBC Capital analyst Gregory Renza.
“With a proven MOA from the clinically successful P2X3 antagonistgefaxipant (MRK), we believe the high selectivity of BLU-5937 could lead to minimal taste effects and drive higher patient compliance and preference than gefapixant, where, if successful, we estimate revenues as early as2024 with over $900M peak global sales potential in RCC with upside from potential label expansion into indications linked to P2X3 hypersensitivity,” Renza noted. ”Despite the PE miss of the ph.II trial in RCC, we believe the stats sig reduction in awake cough frequency in patients with high baseline demonstrated POC and viability of the asset.”
It should come as no surprise, then, that Renza joined the bulls. Along with an Outperform rating, the analyst gives the stock an $8 price target. This target conveys his confidence in BLU’s ability to surge ~116% in the next twelve months. (To watch Renza’s track record, click here)
Turning now to the rest of the Street, other analysts also like what they’re seeing. With 3 Buys and no Holds or Sells, the word on the Street is that BLU is a Strong Buy. At $8.67, the average price target indicates ~134% upside potential. (See BLU stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.