TipRanks
2 “strong buy” actions with big discounts
Whether markets go up or down, every investor loves a bargain. There is a thrill in finding valuable stock at a very low price – and then watching it appreciate in the medium and long term. The key here for investors is to find options in which the risk / reward combination works towards a long-term advantage. So, how should investors distinguish between names that should recover and those that should remain at rock bottom? That’s what Wall Street professionals are here for. Using the TipRanks database, we identified two defeated stocks that analysts believe are preparing for a recovery. Despite the heavy losses incurred in the past 52 weeks, the two tickers received enough praise from Street to earn a consensus rating of “Buy Strong”. Theravance Biopharma (TBPH) We will start with Theravance, a biopharmaceutical company that focuses on the development of organ-specific drugs. Its current pipeline includes drug candidates for the treatment of inflammatory lung and intestinal diseases, as well as orthostatic neurogenic hypotension. Research programs range from Phase 1 to Phase 3 tests. Theravance already has YUPELRI on the market as a treatment for COPD. YUPELRI is the basis for most of Theravance’s revenue, which in the third quarter reached US $ 18.3 million. This represented a 47% increase year over year and was driven by a 124% increase in YUPELRI’s sales. Of more immediate interest to investors is Trelegy Ellipta, GlaxoSmithKline’s new once daily inhaler drug developed as a maintenance treatment for asthma, which was approved by the FDA in September 2020. This approval will give Theravance a slice of the revenue from a drug with a wide potential audience, as asthma affects more than 350 million people worldwide. Theravance has royalty rights over Trelegy, with estimated revenue of 5.5% to 8.5% of total sales. Trelegy was initially approved in the USA as the first triple therapy with a single inhaler once a day for the treatment of COPD. Like many biofarms, Theravance has a high overhead and its approved drugs are at the beginning of their profitable lives. This keeps net income and revenues low, at least in the short term, and leads to a discount on the share price – TBPH has dropped 32% in the past 52 weeks. Covering Leerink’s shares, analyst Geoff Porges remains optimistic about Theravance, mainly due to the combination of its robust pipeline and its approved treatments for lung diseases. “Theravance’s respiratory drugs are its primary drivers of short-term evaluation … We still forecast ~ $ 2.4 billion in WW triple sales at the peak (2027E). In addition to TBPH’s commercial assets / partners, the company is also developing an enhanced JAK inhibitor (JAKi) in partnership with JNJ (OP) for inflammatory bowel disease (IBD) and a norepinephrine and serotonin reuptake inhibitor (NSRI) TD- 9855 (ampreloxetine) for neurogenic orthostatic hypotension (nOH). Each of these drugs enhances the delivery of new exclusive compounds against proven mechanisms of action and can offer superior safety and / or treatment effect, from their broader therapeutic windows, ”noted Porges. To that end, Porges classifies TBPH as Outperform (ie Buy) and gives it a target price of $ 35, which implies an impressive 104% increase in one year. (To see the history of Porges, click here) In general, there are 5 reviews on file, all of which are for Buy, making the purchase consensus strong unanimous. TBPH’s shares are quoted at $ 16.95, and its average price target of $ 33.60 suggests an increase of 97% from that level. (See TBPH’s stock analysis at TipRanks) NiSource, Inc. (NI) NiSource is a utility holding company with subsidiaries in the natural gas and electricity sectors. NiSource supplies power and gas to more than 4 million customers in Indiana, Kentucky, Maryland, Massachusetts, Ohio, Pennsylvania and Virginia. The majority of NiSource’s customers, about 88%, are in the gas sector; the company’s electrical operations serve customers in Indiana only. The company saw third-quarter revenue reach $ 902 million, down from $ 962 in the previous quarter and $ 931 in the previous year’s quarter. Overall, however, revenues followed the company’s historical pattern: the second and third quarters are relatively low, while revenue increases with cold weather in the fourth quarter and peaks in the first quarter. This is typical of utility companies in North America. Despite lower revenue year on year, NiSource felt confident enough to maintain its dividend payment, keeping it stable at 21 cents per common share until 2020. This annualizes to 84 cents and yields 3.8% . The company not only felt confident to pay revenue to shareholders, but it also felt confident to invest heavily in renewable energy resources. The company has a capital expenditure plan for the EF20 in excess of $ 1.7 billion and is targeting $ 1.3 billion for the EF21. These expenses will finance ‘green’ energy projects. NI is currently trading at $ 21.67, an impressive distance from its 52-week low. One analyst, however, believes that the lower share price offers investors an attractive entry point today. Gary Hovis, an analyst at Argus, assesses NI as a Buy along with a target price of $ 32. This figure implies a 48% increase from current levels. (To see Hovis’ history, click here) “NI shares look favorably at 18.1 times our 2021 EPS estimate, below the average multiple of 21.6 for comparable electricity and gas utilities,” noted Hovis . “NiSource could also become an acquisition target, as large utility companies and private equity firms have been purchasing smaller public services because of their steady above-average profit and dividend growth.” Overall, Wall Street sees a clear path for NiSource – a clear fact from Strong Buy’s unanimous assessment of the consensus, based on 3 recent Buy-side assessments. The shares are selling for $ 21.68, and the average target price of $ 28.75 suggests an increase of ~ 32% in the period of one year. (See NI stock analysis at TipRanks) To find good ideas for losing stock trades with compelling valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all TipRanks stock insights. Disclaimer: The opinions expressed in this article are exclusively those of the analysts presented. The content should be used for informational purposes only. It is very important to do your own analysis before making any investments.