Goldman Sachs: these 2 stocks are ready to double (or more)
The new week started on a negative note as all three major indexes pulled back from record highs. After applauding recent strong economic data, the worsening global coronavirus situation seemed to have soured investor sentiment. But according to David Kostin, Goldman Sachs’ US chief strategist, investors shouldn’t get too excited. The overall trend remains upward, and Kostin points out that volatility – the difference between the highs and lows in the market – is down. He sees the relative predictability of policy, now that the elections are decided and behind us, as more definitive for short-term performance. “The low volatility outweighed the low correlations between stocks, pushing the yield dispersion back below the long-term average. As the US moves beyond major macro events such as the 2020 elections, the $ 1.9 trillion fiscal stimulus package and peak economic activity,” We expect three defining themes for markets are tax reform, infrastructure and pricing power, “Kostin said. Considering Kostin’s outlook, Goldman Sachs analysts pound the table on two stocks, noting that each could double or more in the next year. Using TipRanks’ database, we found out that the rest of the Street is on board as well, as each one has a “Strong Buy” consensus rating. DigitalOcean Holdings (DOCN) We start in high-tech, where DigitalOcean is a medium-sized fish is among the giants of the sea, the company provides cloud computing services for developers ars, small to medium businesses and startups. DigitalOcean cannot compete with Amazon or Microsoft at scale, so the company has promoted simplicity as a virtue. The move has been successful to some extent; DigitalOcean claims more than 570,000 customers worldwide and had $ 357 million in annual recurring revenue at the end of 2020, along with 25% year-over-year revenue growth. The company operates 14 data centers in the US and Canada, in the UK, Germany and the Netherlands, and in India and Singapore. All of this adds to a solid foundation, and DigitalOcean has recently benefited from it in the most direct way. The company entered the public markets and launched its initial public offering on March 24 this year. The stock was priced at $ 47 and the company raised ~ $ 775 million. Analyst Christopher Merwin thought it appropriate to initiate coverage of this stock for Goldman Sachs with a Buy rating and a price target of $ 101. At current levels, this target suggests a 143% rise over a year. (To view Merwin’s track record, click here) “While we think some investors are applying a lowered valuation to DigitalOcean due to lower gross margins, we think that approach is overly punitive as Digital Ocean has a very efficient sales and marketing move. Sales and marketing spend was only 10% of revenue in 2020, largely due to a highly efficient self-service go-to-market movement and developer community helping to lower customer acquisition costs, “Merwin said. The analyst summed up: “With a stronger growth and margin profile, we therefore believe that DigitalOcean should trade at a premium to the middle class.” In its short time in the public markets, DOCN has garnered 10 reviews. These include 8 Buys and 2 Holds, giving the analyst a consensus assessment of a strong buy. The stock is priced at $ 41.50 with an average target of $ 58.20, putting the upside potential at 40% over the next 12 months. (See DOCN Stock Analysis on TipRanks) Apellis Pharmaceuticals (APLS) As we shift, we look at Apellis, a biopharma company with a unique niche. Apellis focuses on C3 therapies, aimed at correcting overactivation of the complement cascade, part of the immune system. The complement cascade, or complement, clears up damaged cells, promotes inflammation, and attacks the cell membrane of pathogens. These activities are handled by a series of small sequential proteins; Apellis focuses on C3 to control an overactive complement system. C3 is the central part of the cascade, and its targeting focuses on three possible pathways for disease states. Apellis’ approach has potential applications in a wide variety of medical fields, including hematology, nephrology, neurology and ophthalmology. The company’s pipeline includes one drug candidate, pegcetacoplan, with a wide variety of applications. The drug acts directly on C3, and its targeted use was recently shown to be effective by positive phase 3 data in a study focusing on the rare blood disease paroxysmal nocturnal hemoglobinuria (PNH). In addition to studying the use of pegcetacoplan for PNH, Apellis has five other clinical research projects for the drug candidate. However, the PNH trial is the most advanced, and marketing applications for the drug – in the treatment of PNH – are currently under review by both the FDA and the European Medicines Agency (EMA). The PDUFA date for FDA action is May 14 this year. The main results of the Phase 3 PRINCE trial, using the drug to treat PNH patients, are expected in 2Q21. In addition to the other applications of pegcetacoplan, the phase 3 geographic atrophy (GA) study is underway, with results expected in the third quarter of this year. Looking ahead, Apellis expects to bring three new drug candidate programs into clinical development by the end of next year. In his account of this stock for Goldman Sachs, five-star analyst Madhu Kumar sees the pegcetacoplan projects as the key here. We see APLS as a story of two independent franchises based on the complement C3 cyclic peptide inhibitor pegcetacoplan. While systemic pegcetacoplan has already yielded clinical POC in PNH in the Phase 3 PEGASUS trial, the results of which we believe should support drug approval on the PDUFA date of May 14, 2021, the bigger question this year is whether IVT Pegcetacoplan will succeed in the potentially significant market (we are modeling peak risk-adjusted revenue of $ 4.8 billion) of geographic atrophy (GA) in the Phase 3 DERBY / OAKS studies, for which top data is expected in 3Q21, “said the analyst. Kumar continued. , “Overall, we believe that Apellis offers an intriguing risk-reward profile moving towards this 3Q21 data, not because we are convinced of the success of IVT pegcetacoplan … but because we believe the potential benefit of success is significant. while the downside risk of failure is limited. Buy rating comes with a price target of $ 130, implying a robust 185% rise rate for the stock in one year. (To view Kumar’s track record, click here) Overall, this stock is getting solid approval from Wall Street, with a strong buy consensus rating based on buy 7 versus hold 1. Stocks in APLS are trading at $ 45.64 and have an average target of $ 73.67, indicating there is room for 61% appreciation in the coming year (See APLS Stock Analysis on TipRanks) To find great ideas for stocks trading at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a recently launched tool that brings together all of TipRanks’ insights on stocks. Disclaimer: The Opinions in this article are only those of the recommended analysts. The content is provided for informational purposes only. It is very important to conduct your own analysis before when you make an investment.