A Wall Street Journal article helped propel stocks forward on Friday after the piece implied the rate-setters at the Fed might put the brakes on heavy rate rises from December onwards.
On account of the surge, all three major indexes put in the best weekly performance since June with the Nasdaq’s 5.2% gain leading the charge followed by the respective 4.9% and 4.7% upticks of the Dow and the S&P 500.
Investors will naturally be hoping the market’s latest move upwards has staying power as each previous positive market move this year has been followed by a retreat.
So, how is one to navigate the current market conditions? One way is to follow in the footsteps of the top investment banks’ recommendations.
Goldman Sachs analyst Paul Choi has pinpointed two stocks which he believes are ripe for the picking – he sees both adding at least 60% over the coming months. Choi is not alone in believing the pair make good investment choices right now. According to the TipRanks database, both are rated as Strong Buys by the analyst consensus. Let’s find out why the experts are getting behind these names.
Gossamer Bio (GOSS)
The first ‘Goldman pick’ we are looking at is clinical-stage biopharma Gossamer Bio. This company’s activity is centered on developing and bringing to market medicines indicated for several disease areas such as cardiopulmonary, hematology/oncology, and neurology, amongst others.
The company’s lead candidate is seralutinib (GB002), which is being evaluated as a treatment for pulmonary arterial hypertension (PAH), a progressive, life-threatening condition in which blood pressure is too high in the blood vessels between the heart and the lungs. While there are available products to treat this disease, the five-year survival rate is only a touch above 55%.
The drug is currently in a Phase 2 study (TORREY) with a top-line readout expected in late November/early December.
Goldman’s Paul Choi expects a positive outcome, believing the drug is “likely to meet the primary endpoint.” And that could act as a real catalyst for the stock, while the rest of the pipeline looks attractive too.
Gossamer has two other early-stage candidates in its pipeline; GB5121, which is being assessed in a Phase 1b/2 study of primary CNS lymphoma, and GB7208 for the treatment of multiple sclerosis (MS). This candidate is still in the preclinical stage.
“Should the TORREY data prove to be positive as we expect,” Choi said, “we would anticipate increased strategic interest in GOSS given the attractive market opportunity within PAH and the opportunity to leverage the asset in PAH/ILD, IPF, and related indications. Separately, we are encouraged by GB5121’s preclinical profile and view the development strategy of focusing initially on a niche indication like r/r primary CNS lymphoma as both attractive and practical. And while competitors’ BTKs have stumbled in multiple sclerosis (MS), there is an opportunity for a next generation candidate like GB7208 to build on prior data.”
“We are broadly bullish on GOSS’s pipeline and view the risk/reward profile at current levels as favorable,” the analyst summed up.
To this end, Choi initiated coverage on GOSS with a Buy rating, while his $22 price target makes room for one-year gains of 75%. (To watch Choi’s track record, click here)
Overall, the bulls have it on this one. 6 Buy ratings and 1 Hold have been published in the last three months. Therefore, GOSS gets a Strong Buy consensus rating. At $19.86, the average target suggests shares will climb 58% higher in the year ahead. (See GOSS stock forecast on TipRanks)
Ascendis Pharma (ASND)
We’ll stay in the biotech sector for our next Goldman endorsed stock. Ascendis’s remit is to transform patients’ lives by bringing to market new and potentially best-in-class therapies with a focus on unmet medical needs. The company’s TransCon technology platform utilizes advanced chemistry expertise to optimize the delivery of known drugs by binding a still carrier to a parent drug with familiar biology.
Ascendis’ pipeline includes three endocrinology programs for rare diseases and two oncology programs in earlier stages.
A biotech’s holy grail is to get a drug approved, a feat already achieved by Ascendis. In October 2021, Skytrofa (TransCon hGH), became the only FDA-approved once-weekly treatment for pediatric growth hormone deficiency. After a slow start, the drug’s launch has been picking up steam with sales helping the company beat top-line expectations in Q2.
The rest of the pipeline also offers promise, with several potential catalysts on the horizon.
Taking a closer look, we find TransCon PTH, a parathyroid hormone which is being developed as a once-daily hormone replacement therapy. After presenting positive data from a phase 3 study, the company recently submitted an NDA (new drug application) to the FDA, with a PDUFA date expected to be announced in 4Q22.
There should also be a data readout from the Ph1/2 TransCon IL-2 β/γ study in Q422; this drug is being developed to treat locally advanced or metastatic solid tumors.
Then there’s TransCon CNP, indicated as a treatment for achondroplasia – a skeletal dysplasia that is behind the most prevalent form of dwarfism. Top-line data from a Phase 2 trial is also anticipated in 4Q22.
Opening coverage of this stock for Goldman Sachs, Paul Choi writes: “Overall, we see an attractive profile for the current biotech market backdrop given ASND’s mix of commercial stage products and upside potential from its mid- and late-stage clinical programs.”
Accordingly, Choi rates ASND shares a Buy, and his $174 price target makes room for 12-month share appreciation of 60%.
There’s unanimous agreement here amongst the Street’s analysts; all 7 recent reviews say this is a stock to Buy, which naturally results in a Strong Buy consensus rating. At $155.17, the average target presents potential upside of 43% over the coming months. (See ASND stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.