3 Actions that JP Morgan says are ready to grow more
Take a deep breath, get ready, the New Year is coming, and while we are all ready to celebrate – just in principle, because leaving 2020 is a cause for joy – we will also take stock of where we are and where we are going. There is a growing sense of optimism, generated by the availability of COVID vaccines and the potential they give for a return to normal on the main streets across the country. Finally, a chance that the social blocking and distancing regimes will really end, and in the short term. There is a real chance that, by the end of 2021, John Q. Public will recover. Combine that with the current boiling of Wall Street, as the stock markets are trading at their highest or next levels, and we are looking at the prospect of an exceptional year. A return to baseline normality will be great – but we also have the prospect of a rising general market. Writing from JPMorgan, US chief stock strategist Dubravko Lakos-Bujas writes: “Stocks are facing one of the best scenarios in recent years. The risks related to global trade tensions, political uncertainties and the pandemic will disappear. At the same time, liquidity conditions remain extremely favorable and there is an extremely favorable interest rate environment. This is a Goldilocks environment for risky assets. ”Lakos-Bujas does not hesitate to quantify his optimism. He is forecasting gains of up to 19% for the S&P 500, saying that the index will reach 4,000 in early 2021 and will reach 4,400 by the end of the year. Transforming the Lakos-Bujas perspective into concrete recommendations, JPM’s stock analyst cadre is hitting the table with three stocks that look especially attractive. We ran the trio through the TipRanks database to see what other Wall Street analysts have to say about. Sotera Health (SHC) Sotera Health occupies a unique niche in the health sector, offering, through its subsidiaries, a range of safety-oriented support businesses for healthcare providers. These services include sterilization procedures, laboratory tests and consulting services – and their importance is immediately clear. Sotera has more than 5,800 healthcare providers in more than 50 countries around the world. Although not a new company – two of its subsidiaries have been in the market since 1930 and 40 – Sotera is new to the stock market, having just completed its IPO this past November. The initial offering was considered successful, raising $ 1.2 billion from a sale of 53.6 million shares. Earlier this month, Sotera announced that it used much of the IPO’s capital to pay off $ 1.1 billion in existing debt. This included $ 341 million in a first secured loan, plus $ 770 million in principal aggregate in a senior guaranteed note issue. The change allowed Sotera to increase its revolving credit line to $ 347.5 million. This facility has not yet been understood. Among the bulls is JPM analyst Tycho Peterson, who rated SHC as Overweight (ie Buy) along with a $ 35 one-year target price. This figure suggests a 31% rise from current levels. (To see Peterson’s track record, click here) “The SHC is in a unique position to benefit from healthy growth in the end market and favorable price dynamics,” noted Peterson. “Given a diversified operating platform, strict multi-year contracts, an efficient pricing strategy, significant barriers to entry and high regulatory oversight, we forecast sales growth of ~ 9%, with increased utilization leading to continued expansion [and] The robust FCF supports continuous deleveraging, leaving us optimistic about the short and long term prospects. ”The Wall Street analyst corps is firmly behind Peterson at this point – in fact, the 7 recent reviews are unanimous purchases, making analysts’ consensus a strong buy. The SHC is currently trading at $ 26.75, and its average price of $ 32.50 implies an increase of 21.5% by the end of 2021. (See the SHC stock analysis at TipRanks) Myovant Sciences ( MYOV) We will continue with the health sector and look at Myovant Sciences. This biopharmaceutical clinical research company focuses on the main problems of diseases of the reproductive system in men and women. Specifically, Myovant is working to develop treatments for uterine fibroids, endometriosis and prostate cancer. The Myovant pipeline currently features Relugolix as a treatment for fibroids and endometriosis. The drug is in phase 3 testing for the latter and had its NDA submitted for the former. Also in preparation, and related to reproductive health, is MVT-602, a new drug developed to improve egg maturation and assist in vitro fertilization. In addition, Myovant announced this month that Relugolix has been approved by the FDA – under the Orgovyx brand – as a treatment for advanced prostate cancer. The drug is the first, and currently the only, antagonist of the oral gonadotropin-releasing hormone (GnRH) receptor for the disease. Orgovyx is expected to enter the market in January 2021. Analyst Eric Joseph, in his note on this action for JPM, describes how impressed he is with Relugolix “based on the clinical and commercial potential of the active lead relugolix for the treatment of endometriosis and uterus fibroids, as well as in men for the treatment of advanced prostate cancer. “The analyst added:” In women’s health, we believe that the entirety of phase 3 data to date reduces the risk of relugolix approval in the U.S. for uterine fibroids and endometriosis – business opportunities that are underrepresented at current levels. In addition, we see an attractive commercial configuration for relugolix in the treatment of advanced prostate cancer as an oral LHRH alternative with a differentiated CV risk profile. ”These comments support Joseph’s Overweight (ie Buy) rating on MYOV, and his $ 30 target price implies a 31% increase in the next 12 months. (To see Joseph’s history, click here) Overall, the strong buying analyst’s consensus rating on Myovant comes from 5 reviews, and the split is clearly for bulls: 4 to 1 in favor of buying versus waiting. The $ 22.80 share price and the $ 36.40 average price target provide a robust upside potential of ~ 59%. (See the MYOV stock analysis at TipRanks) Metropolitan Bank Holding (MCB) For the third action, we will switch from healthcare to finance, where Metropolitan Bank Holding operates – through its subsidiary, Metropolitan Commercial Bank – as a service bank complete for business, corporate and personal customers in the mid-market segment. The bank’s services include commercial loans, cash management, deposits, electronic banking, personal checks and prepaid cards. In a year that has been difficult for most of us, the MCB has managed to show increasing revenues and solid gains. The bank’s net revenue increased from $ 33 million in the first quarter to $ 36 million in the third quarter. EPS was stronger, at $ 1.27 per share, an increase of 30% year on year. The gains come as the bank gives a future projection of $ 153.9 million in total revenue for the next year, which – if fulfilled – will reflect a 22% gain in 2020. Although MCB’s financial performance has shown steady gains, the stock appreciation did not follow suit. The stock only partially recovered the losses suffered last winter at the height of the corona crisis, and is currently down 26% this year. Looking at JPM’s New York banking landscape, analyst Steven Alexopoulos notes general difficulties in the commercial real estate lending sector – an important part of the MCB portfolio – due to ongoing pandemic problems. In this environment, he sees Metropolitan Bank as the right choice. “We are not as pessimistic as most about the prospects for the New York housing market. Having witnessed many cycles in New York, the time to buy is when the herd is running in the opposite direction. In previous cycles, MCB outperformed credit metrics in relation to its loan portfolio compared to our coverage group, ”noted Alexopoulos. Alexopoulos goes on to explain another strength of the MCB loan portfolio: “In a low interest rate environment, MCB is better positioned than its peers to resist NIM headwinds, with 59% of MCB loans being fixed rate and 67% of the remaining floating rate loans have floors to protect themselves from lower short-term rates … ”To this end, Alexopoulos classifies the MCB as Excess (or Buy) along with a $ 50 price target. the goal is reached, investors can achieve gains of 43% next year. (To see Alexopoulos’ history, click here) Some actions fly below the radar, and MCB is one of them. Alexopoulos is the only recent review by analysts at this company, and it is decidedly positive. (See TipRanks MCB stock analysis) To find good ideas for stock trading 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 analyst presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investments.