We always seem to make new lists at the New Year, and this year is no exception. Wall Street’s analysts are scouring through the markets, finding the stocks they like, and putting together their lists of ‘Top Picks,’ the equities they see as the best of the pack heading into January.
We can get a flavor for the quality of their advice by turning to Cowen, one of the Street’s major investment firms. Three of the firm’s top analysts, all rated 5-stars from TipRanks, have selected the stocks they see as ‘top picks,’ and their comments make for interesting read. Let’s take a closer look.
Quanterix Corporation (QTRX)
We’ll start with Quanterix Corporation, a company in the life sciences niche, using new techniques in ultra-sensitive digital immunoassay platforms to generate precision research and diagnostics. Quanterix bases its diagnostic platforms on a propriety technology, Simoa, and offers a range of instruments an assay kits for improved diagnostic testing and lab work. The testing instruments are designed to enable earlier disease detection, allowing enhanced treatment and more successful patient outcomes.
In November, the company announced that its Simoa technology had shown important benefits in clinical trials for the treatment of Alzheimer’s disease. By making available the use the plasma biomarkers in diagnostic testing, the tech allows researchers to focus their trials on patients with an earlier stage of the disease, for a more efficient trial enrollment.
Points like that help to explain Quanterix’s fourth year in a row on the Deloitte Technology Fast 500 list. This is a list of the fastest-growing North America companies in the fields of tech, fintech, energy tech, life sciences, telecom, and media.
While Quanterix is bringing in accolades, the shares are actually down this year. The company’s stock has fallen 55% from its February peak. And, in addition to the falling stock, the company’s revenues are down, with the top line in 3Q21 coming in at $27.7 million, 11% lower than in the year-ago quarter.
Cowen analyst Max Masucci, however, still sees this stock as a strong choice. He writes, “We believe the specific role QTRX serves as a next-gen targeted proteomics provider is underappreciated and somewhat misunderstood. Driven by a catalyst-rich 2022 (at a company-specific and industry level), we expect appreciation for QTRX’s technology (and its benefit to researchers, biopharma, and down the road, patients) to rise, which should help to narrow the gap between QTRX’s multiple and the peer average and drive beats versus conservative consensus estimates.”
These comments back up Masucci’s Outperform (i.e., Buy) rating, and his $60 price target implies an upside for the coming year of 46%. (To watch Masucci’s track record, click here)
Overall, the Wall Street view on Quanterix is bullish, based on a unanimous 3 positive ratings giving a Strong Buy consensus view. The shares are priced at $41.07 and their $81 average price target suggests an upside of ~97% for the next 12 months, even higher than the Cowen analyst allows. (See QTRX stock analysis at TipRanks)
BioMarin Pharmaceutical (BMRN)
Next up is BioMarin, a California-based biopharma researcher involved in the discovery, development, and commercialization/marketing of new treatments for rare disease conditions. The company’s specific focus is on genetic diseases with debilitating or life-threatening symptoms – and few or no current treatments.
BioMarin has seven FDA-approved drugs on the market, which brought in a total of $1.84 billion in revenue last year. That total was up 8% from 2019’s $1.7 billion. In 3Q21, the company had $408.7 million in revenues, while BioMarin’s biggest seller, Vimizin, the first treatment for Morquio A syndrome, brought in over $136 million of that revenue. In another bright spot, BioMarin finished the quarter with $1.54 billion in liquid assets, up 14% from the end of 2020.
On a negative note, however, the Q3 revenue was down almost 14% year-over-year. Management noted that pandemic effects led to ‘uneven ordering patterns’ during the year, impacting revenues. Looking ahead, the company is guiding toward full-year revenues in the range of $1.82 billion to $1.88 billion.
BioMarin, in addition to its approved line-up of products, also has a solid pipeline of drugs in development. There are six research programs ongoing, with 3 in preclinical testing, two in Phase 1 trials, and one, BMN 270, in a Phase 3 trial. BMN 270, a drug candidate known as valoctocogene roxaparvovec or roctavian, is on track for a BLA resubmission in 2Q22. The earlier stage studies have a variety of catalysts expected in the coming months. BioMarin has a history of commercializing quickly and effectively once a drug is approved; its most recently approved product, Voxzogo, got the go-ahead from the FDA in November and is already on the market.
Cowen’s Phil Nadeau believes that BioMarin can turn its stock around and attract new capital with strong commercialization activity. He writes, “We anticipate that a strong Voxzogo launch and FDA approval of Roctavian will return investor interest to BMRN. In fact, our model projects that Roctavian and Voxzogo’s launches will drive a 15% revenue CAGR through 2026, among the highest in profitable biotech. We are optimistic that these fundamentals will make BMRN a top performer over the next 12 months…”
These comments back up Nadeau’s Outperform (i.e. Buy) rating, while his $135 price target suggests the stock has a 61% upside by the end of 2022. (To watch Nadeau’s track record, click here)
The interest that Nadeau foresees is already developing on Wall Street – there are 15 ratings on record for this stock, and their 12 to 3 Buy-Hold breakdown gives a Strong Buy consensus. The stock is selling for $83.79 and the $112.36 average price target implies a one-year upside of 34%. (See BMRN stock forecast on TipRanks)
Let’s wrap up the list in the networking sector. Cloudflare is an online network operator, offering content delivery services, domain name server services, and web infrastructure and website security services. Online services are a hot item in today’s digital world, and Cloudflare’s annual revenues show that. The company brought in $287 million in total revenue for 2019, and saw that rise to $431 million last year. Cloudflare has reported a sequential gain in revenue every quarter for the past two years.
Even so, the company’s stock is down 36% from its mid-November peak. There’s been a sense in the market’s lately that the company may have run-up faster than was justified, and was due for a correction. The shares had gained 189% from the start of the year to their peak value.
The 3Q21 report, however, shows that the company is still a growth proposition. Quarterly revenue, at $172.4 million, was up almost 51% yoy. More importantly, EPS hit the break-even – a positive development after running consistent losses for several years.
5-star analyst Shaul Eyal sets out the Cowen view here, providing a distinctly bullish take on Cloudflare’s outlook: “We believe it took investors less than two years to view NET as not only a SMB security/infrastructure/ provider but rather an integrated global cloud platform provider ready to take on names such as AWS which is quickly climbing into the high-enterprise arena. With ~1,300 large customers and over 50% of revenue generated from large customers, NET’s mission of building a better Internet becomes crystal clear.”
To this end, Eyal gives NET shares an Outperform (i.e. Buy) rating, while his $250 price target indicates his confidence in an upside of ~80% for the next 12 months. (To watch Eyal’s track record, click here)
All in all, NET holds a Moderate Buy rating from the analyst consensus. This is based on 16 reviews, including 7 Buys, 8 Holds, and 1 Sell. The stock’s $198.36 average price target suggests it has room for ~43% growth from the $139.05 trading price this year. (See NET stock forecast on TipRanks)