Investing is all about profits, and part of generating profits is knowing when to start the game. The old adage says to buy low and sell high, and while it’s tempting just to discount cliches like that, they’ve passed into common currency because they embody a fundamental truth. Buying low is always a good start in building a portfolio.
The trick, however, is recognizing the right stocks to buy low. Prices fall for a reason, and sometimes that reason is fundamental unsoundness. Fortunately, Wall Streets analysts are busy separating the wheat from the chaff among the market’s low-priced stocks, and some top stock experts have tagged several equities for big gains.
We’ve used the TipRanks database to pull up the data and reviews on two stocks that are priced low now, but may be primed for gains. They’ve been getting positive reviews, and despite their share depreciation, they hold a Strong Buy consensus rating and show upwards of 100% upside potential.
Inozyme Pharma (INZY)
We’ll start in the world of biomedical research, where Inozyme is a biopharma company engaged in research on the treatment of rare diseases involving abnormal mineralization of the vascular, skeletal, and soft tissues in the body.
Inozyme currently has one drug candidate on several simultaneous research tracks in the pipeline. INZ-701 is a solid protein capable of circulating through the body. It was designed to have long-term distribution and elimination phases, for a steady-state concentration in the blood. INZ-701 is undergoing research as a treatment for two genetic diseases, ENPP1 deficiency and ABCC6 deficiency. ENPP1 is associated with arterial calcification and a form of rickets, while ABCC6 deficiency leads to pathological mineralization of the blood vessels, with potentially terminal effects including cardiovascular complications and skin calcification.
In recent months, Inozyme has made progress on the preparations for clinical trials of INZ-701. The drug candidate has received Orphan Drug designation from the European Medicines Agency for the treatment of ABCC6 deficiency, and the clinical trial application in Europe has been accepted for a Phase 1/2 study on that track. In the US, Inozyme’s Investigational New Drug application was accepted for a similar Phase 1/2 trial. The company expects to enroll patients in clinical trials for both ABCC6 and ENPP1 deficiencies in 4Q21, and to report safety data during 1H22.
Inozyme’s shares are down 44% so far this year, despite meeting these important milestones. According to Wedbush analyst David Nierengarten, the current low price represents a buying opportunity. Nierengarten rates INZY an Outperform (i.e. Buy) with a $37 price target that implies an upside of 228% for the year ahead. (To watch Nierengarten’s track record, click here)
“The anticipated data release from the first-in-human studies of ‘701 marks a potentially pivotal de-risking event for this program. Positive initial data could result in additional upside to our current $37 PT. As it stands, our valuation model indicates INZY shares remain undervalued ahead of initial human data for an enzyme replacement therapy. As a result, now is the time to own INZY before first-in-human data is released in the next 12 months,” Nierengarten wrote.
While Inozyme only has 2 additional analyst reviews, they are in agreement with the Wedbush view, making the Strong Buy consensus rating unanimous. The stock is priced at $11.28 with a $38.50 average target, suggesting room for ~241% upside in the next 12 months. (See INZY stock analysis on TipRanks)
Molecular Templates (MTEM)
Now we’ll turn to another clinical stage biopharmaceutical company, Molecular Templates. This company is working to discover and develop a new generation of immunotoxins, engineered toxin bodies (ETBs) that are a novel class of therapeutics that combine unique biology with differentiated modes of action. The company has three such ETB drug candidates in clinical trials, targeting multiple myeloma along with solid tumor cancers.
In August of this year, the company took control of full rights to TAK-169 from its partner Takeda, bringing this multiple myeloma treatment entirely under MTEM auspices. The drug is in a Phase 1 study which began dosing patients in February of last year. The company plans to issue an update on the study in 4Q21.
The other ongoing clinical trials both target solid tumor cancers. The study of MT-5111 focuses on HER2-positive breast cancer and data from the dose escalation portion of the study should be available in the upcoming Q4. The final trial ongoing, of MT-6402 as a treatment for PD-L1 expressing tumors, has begun with a dose of 16 mcg/kg, and determination of the maximum tolerated dose will lead to recommendations for further studies. Molecular Template is on track to release an update of this study in 4Q21 as well.
Despite these ongoing trials, the company’s stock plunged 36% so far this year, and is currently hovering close to its 52-week low of $5.76.
Oppenheimer’s 5-star analyst Kevin DeGeeter is bullish on MTEM’s prospects, writing: “We view MT-5111 and MT-6402, which target large established markets with an alternative MOA, as the two ETB programs with the best opportunities for near-term value creation. TAK-169 is positioned to address the growing market for daratumumab resistant multiple myeloma patients. If safety and immunogenicity profile are demonstrated in Phase I for MT-5111, MT-6402, or TAK-169, we believe additional biotech companies will be interested in licensing the ETB platform.”
To this end, DeGeeter rates MTEM an Outperform (i.e. Buy) and his $13 price target suggests an upside potential of 116% over the coming year. (To watch DeGeeter’s track record, click here)
Overall, this stock has a Strong Buy analyst consensus, based on 4 reviews that include 3 to Buy and 1 to Hold. The shares are currently trading for $6.02 and the average target of $13 matches DeGeeter’s, predicting a 116% upside from current levels. (See MTEM 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.