Weekly Market Review: IPOs and Vaccines Take the Spotlight

U.S. stocks fell fractionally this week, led by Real Estate names. That said, investor attention was focused on the initial public offerings of two Internet unicorns.

Both Airbnb (ABNB) and Doordash (DASH) made a big splash with investors this week. Each sold over $3 billion of new stock and then promptly saw their prices shoot higher in the open market.

Elsewhere, Pfizer’s (PFE) vaccine received emergency approval from the Food and Drug Administration (FDA) late Friday. Doses are expected to be available in the U.S. on Monday.

In the meantime, economic relief talks remain at an impasse in Washington D.C. Any progress would be welcome, as weekly initial jobless claims reached a three-month high on Thursday.

Coronavirus Update

It may no longer be the top news story in the financial press, but the coronavirus pandemic is still with us.

In addition to the Pfizer vaccine approval in the U.S. on Friday, the U.K. began distributing shots earlier in the week. On Tuesday, AstraZeneca’s (AZN) vaccine also a positive study, deeming it both safe and effective.

Until these vaccines can be widely distributed, New York City was the latest area to re-enact business restrictions this week.

If the pandemic continues to spread, it could hamper the positive trajectory of the economic recovery as we head into 2021.

What to Expect Next Week

In addition to the stimulus talks in Washington, we’ll get a look at November U.S. retail sales on Tuesday. Despite reports of record sales around Black Friday, aggregate numbers are expected to be unchanged from a year ago.

Chairman Jerome Powell will also hold a press conference on Wednesday, following the latest interest rate decision from the FOMC.

Following the snap-back recovery in stocks from March lows, we believe that investment gains will be harder to come by heading into 2021.

As a result, deciding what and when to buy can be challenging for any investor.

However, the fact remains that attractive investments are out there, if you’re willing to dig a little deeper.

One such Healthcare name is worth a closer look and is our Stock of the Week.

Stock of the Week: Horizon Therapeutics (HZNP)

The company’s expertise is in rare diseases. Horizon’s lead product is Krystexxa, which is a treatment for uncontrollable gout.

The stock gained more than 5% this week and we believe this momentum can continue as the calendar changes to 2021. Here’s why:

Earlier this year, the company also received approval from the FDA for Tepezza, to treat thyroid eye disease. Management expects both of these blockbuster products to achieve peak annual sales of at least $1 billion.

Horizon leveraged these two core properties last month, when management delivered quarterly results that exceeded expectations. The company earned $1.74 a share in the third quarter, as revenue increased 89% from a year ago, to $636.4 million. Upside in the period was driven by Tepezza, which management also expects to soon begin marketing outside of the U.S.

At current levels, Horizon is trading at 15.4x expected 2021 earnings of $4.92 a share. This is a discount to both the broader market and the company’s 29% average expected profit growth over the next two years.

Analysts also see upside potential. All six analysts tracked by TipRanks rate the stock a Buy and the average price target of $108.83, represents 44% upside potential.

In addition, it’s worth noting that the company carries a Smart Score of 10/10 on TipRanks. This proprietary score utilizes Big Data to rank stocks based on 8 key factors that have historically been a precursor of future outperformance.

On top of the positive aspects mentioned already, the Smart Score indicates that the shares have seen improving sentiment from investors (both professional and individual) and financial bloggers.

FYI: This is just 1 of the 20+ stocks selected for the Smart Investor portfolio. That’s where we share more detailed insights on our weekly stock picks.