The news lately is focused on the advent of coronavirus vaccines. First Pfizer announced that it had a product in trials, which was showing a 90% efficacy rate, and now Moderna has joined the chorus, with a vaccine that is showing even higher effectiveness, on the order of 94.5%. Between the two news releases, investors are feeling confident; we may be out of the COVID woods sooner than has been anticipated.
In a report on the new vaccine announcement, and what they mean for the financial markets, RBC’s analyst Brian Abrahams wrote, “A key focus for investors, and for society overall, has been how quickly immunity will spread throughout the population – either through infection or vaccination – such that transmission will begin to slow and we can start to return to some sense of normalcy. With [the] announcement of positive data from a second vaccine, this reaffirms the potential high protection rates from immunization and should enable a second supplier that can speed availability; we now see ‘herd immunity’ achievable one month sooner than our previous estimate.”
Turning Abrahams’ outlook into tangible recommendations, RBC analysts are pounding the table on three stocks, with these pros seeing over 100% upside potential in store. Running the tickers through TipRanks’ database, we learned that all three have earned a “Strong Buy” consensus rating from the rest of the Street.
Optinose, Inc. (OPTN)
Optinose is a pharmaceutical company with a unique niche. The company focuses on developing medicinal treatments for the ears-nose-throat specialty. Optinose has one drug on the market, ONZETRA, and a second, XHANCE, in late-stage trials.
Like many research-heavy pharmaceutical companies, Optinose operates a net loss. However, the recent Q3 report showed net revenue at $15.4 million (the highest in over year), beating Street estimates of $14.6 million.
Along with the financial results, Optinose reported some sound operational developments from the third quarter. These included a promotion agreement with fellow pharma firm kaleo to promote XHANCE among healthcare providers and the announcement of a new drug in the pipeline. On a final note, the company had over $143 million in cash on hand as of September 30.
With the price per share landing at $4.09, RBC analyst Randall Stanicky tells investors to get on board before it takes off.
“Metrics provided for 3Q were encouraging with new scripts showing solid sequential growth on the back of greater refill activity, higher market share, and growing traction in high prescribing physicians. At the same time spend guidance was cut. The kaleo co-promotion recently kicked off with OPTN well funded setting shares for further recovery into 2021,” Stanicky noted.
To this end, Stanicky rates OPTN an Outperform (i.e. Buy), and his $17 price target implies an impressive upside potential of 304% from current levels. (To watch Stanicky’s track record, click here)
It turns out that the rest of the Street wholeheartedly agrees with the RBC analyst. With 5 Buys and no Holds or Sells, the message is clear: OPTN is a Strong Buy. The $17.80 average price target puts the upside potential above Stanicky’s forecast at 337%. (See OPTN stock analysis on TipRanks)
Next up is another company in the healthcare sector. GoHealth is an insurance marketplace, working make enrollment easier for customers. The company focuses on the growing Medicare market, but also offers individual and family plans.
GoHealth conducted its IPO earlier this year, in July, in what was the largest healthcare IPO of the year at that time. The company sold 4.6 million shares and raised $914 million, with an initial share price of $21, above the range originally set. The stock has dropped since then, losing almost half its value – but according to RBC, that sets the company up as a buying opportunity.
A strong Q3 underlies that opportunity, as GOCO reported $163.4 million in net revenues for its first full quarter as a public company. This was a 52% gain year-over-year, and contributed mightily to the year-to-date revenues of $431.4 million. GOCO adjusted its full-year 2020 revenue guidance upward, to the $850 to $890 million range.
RBC’s Frank Morgan wrote of GoHealth: “The company continues to benefit from the attractive Medicare Advantage market and leverage its expanding sales platform and technology investments to drive impressive growth and enhanced profitability. We believe the broader market opportunity and GOCO’s operating capabilities provide an attractive set-up for next year and beyond.”
In line with this positive outlook, Morgan rates the stock Outperform (i.e. Buy), and sets a $22 price target. His target indicates confidence in 101% upside growth for the year ahead. (To watch Morgan’s track record, click here)
GoHealth’s Strong Buy consensus rating is supported by 5 Buy reviews and just 1 Hold. The stock has a $20 average price target, suggesting a robust upside of 81% over the next 12 months. (See GOCO stock analysis on TipRanks)
ADT, Inc. (ADT)
Last up is a company in the security sector. ADT is a well-known provider of electronic security, fire alarm systems, and other monitoring services in the residential and small business markets. The company’s blue signs are an easily recognizable indicator of its home protection services throughout the US.
In its third quarter results, released this month, ADT started out by noting its record customer retention rate, a key point for any business, before giving three vital markers of financial performance. Quarterly revenue was down slightly year-over-year, from $1.301 billion to $1.299 billion, but the company’s net loss moderated from $182 million last year to $113 million in the current report. And finally, free cash flow improved year-over-year, from $459 million to $532 million.
5-star analyst Seth Weber wrote the RBC report on this stock, and he liked what he saw. Summing up, Weber notes, “We like ADT’s high revenue visibility, improving returns, and significant free cash flow. We see value in ADT’s bigger push into commercial (faster growing/lower attrition/better returns in a normalized environment) and recent partnership announcement with Google (help capture more of fast growing smart home mkt), as well as other ongoing growth initiatives to help augment/diversify its legacy residential home security offerings.”
These comments support Weber’s Outperform rating on ADT, as does his $15 price target, which implies a 101% one-year upside. (To watch Weber’s track record, click here.)
ADT’s Strong Buy rating is based on 4 analyst reviews, which include 3 Buys and 1 Hold. Meanwhile, the average price target stands at $11.13, making the 12-month upside potential 47%. (See ADT 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.