These are good times for the markets. Inflation concerns are abating, showing that the Fed’s aggressive efforts to tame it are bearing fruit. At the same time, notes Oppenheimer’s Chief Investment Strategist John Stoltzfus, the strength exhibited by labor, the consumer, and business have contributed to “improved sentiment” in the stock market. While the rally that drove the gains in the first part of the year was led by the Mega Caps, it is now widening to less heralded corners. And that brings with it more possibilities.
“A glance at the broader participation among stocks across sectors, market capitalizations and style suggests that both stock pickers and index investors are likely to have more to work with as the year progresses,” Stoltzfus said.
Expecting economic fundamentals to “remain resilient,” Stoltzfus recommends investors take an “Alpha/Beta approach taking advantage of singular opportunities in specific securities.”
And the Oppenheimer analysts have a clear idea where those “singular opportunities” lie. They are pointing investors toward two names they believe are set to push higher from here – and by higher, we mean primed to more than double in value over the next year. Using TipRanks’ database, we found out that the rest of the Street is also on board, as each boasts a “Strong Buy” consensus rating.
ChargePoint Holdings (CHPT)
Everyone now knows that electric vehicles (EVs) represent the future of the auto industry, but these new energy vehicles require a supporting infrastructure. Batteries, chips, and tools for data analysis are needed, and importantly, charging stations. And that’s where ChargePoint comes into the frame.
At more than 70% share, the company leads the level 2 U.S. charging market, and operates in both North America and Europe. ChargePoint has north of 240,000 charging points across its networks, and more than 4,000 commercial and fleet customers. The company doesn’t actually own the charging stations and does not generate revenue from electricity usage. Instead, it offers the hardware and software, allowing it to operate independently from the usage of EV chargers. This low-capital approach reduces risk and enables the company to prioritize its services.
ChargePoint has been displaying consistent year-over-year growth, as that was the case again in the results for its first fiscal quarter (April quarter). Revenue climbed by 59.3% year-over-year to $130.03 million, beating the analysts’ call by $1.67 million. EPS of -$0.23 met Street expectations. However, the outlook was a bit of a disappointment. For FQ2, the company anticipates sales will come in between $148 million and $158 million. At the midpoint, that is some distance below Wall Street’s expectation of $166 million.
The shares have also been under pressure this year due to the charging station deals won by Tesla. All in all, the stock is down by 8% year-to-date. That said, Oppenheimer analyst Colin Rusch points out several reasons why investors should take advantage of the depressed share price.
“Of note, in our view, is that the company’s substantial product development cycle is slowing and management continues to expect material operating leverage as R&D spend moderates,” the 5-star analyst explained. “Second, demand continues to be robust as EV sales grow in multiple geographies driving charging infrastructure buildout. Third, the company is well capitalized as it drives toward positive adjusted EBITDA in F2Y4 and manages working capital needs for growth. We remain constructive on shares as we anticipate the company will enjoy both top-line growth and margin expansion in coming quarters.”
Constructive, indeed. Along with an Outperform (i.e., Buy) rating, Rusch gives CHPT a $27 price target, suggesting shares will enjoy a 209% bounce over the coming year. (To watch Rusch’s track record, click here)
The rest of the Street is not quite as exuberant but still sees plenty of gains ahead. The $15.71 average target implies one-year upside of 79.5%. All told, the stock claims a Strong Buy consensus rating, based on 10 Buys vs. 3 Holds. (See CHPT stock forecast)
Tarsus Pharmaceuticals (TARS)
Now, let’s shift our focus to Tarsus Pharmaceuticals, a clinical stage biotech firm developing therapeutic candidates in the fields of ophthalmology, dermatology, and other areas with substantial unmet medical demands.
With small-cap biotech stocks, it’s all about the pipeline catalysts and Tauras has a big one coming up. Its lead candidate is TP-03, indicated to treat Demodex blepharitis, a common eyelid condition that impacts around 25 million Americans. The drug has concluded the clinical testing process and in both its Phase 3 trials hit all primary and secondary endpoints. A PDUFA date has been set for August 25, and if approved, it will be the first FDA-approved treatment and standard of care for the condition.
Elsewhere in the pipeline, TP-03 is also being assessed as a treatment for MGD (meibomian gland disease) with a Phase 2a readout anticipated in 2H23. During the second half of the year there should also be a top-line readout from the Phase 2a study of TP-05 in Lyme disease prevention. Additionally, a Phase 2 study of TP-04 as a therapy for Rosacea was initiated in 1Q23.
It’s the major catalyst for TP-03 that takes center stage for Oppenheimer analyst Francois Brisebois, although he stresses that the rest of the pipeline is not to be forgotten.
“Commercially led by eye care veteran CCO Mottiwala (ex-VP Marketing Allergan Eye Care), TARS is well-positioned to develop a new category, eyelid health. We are particularly encouraged by market research revealing an intent to prescribe for demodex blepharitis (DB) of 93%. As awareness grows, our conviction in TP-03’s market potential is reinforced. Additionally, we believe TP-03 could benefit from key differences between DB and dry eye disease (DED) markets. Finally, although we currently don’t value TARS’ pipeline, we believe it should not be dismissed and see multiple opportunities for growth and monetization,” Brisebois opined.
To this end, Brisebois rates TARS shares as Outperform (i.e., Buy) while his price target of $43 implies shares will appreciate by a strong 130% in the months ahead. (To watch Brisebois’s track record, click here)
Brisebois’s take is no anomaly. In fact, all 7 recent analyst reviews are positive, making the consensus view here a Strong Buy. The average target is even more bullish than Brisebois will allow; at $46.43, the figure makes room for one-year returns of ~149%. (See TARS stock forecast)
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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.Click Here To Get Funded!