Anyone involved in the investment game will know that it is all about “stock picking”. Choosing the right stock to put your money behind is key to ensuring a solid return on investment. So when Wall Street pros deem a name a “top pick,” investors should take note.
Using the TipRanks platform, we researched details on two stocks that recently earned “Top Pick” designation from some Street analysts.
So, let’s dive into the details and find out what makes them so. Using a combination of market data, company reports and analyst commentary, we can get a sense of what makes these stocks compelling picks for the rest of 2023, and why both are ranked as strong buys by analyst consensus.
EyePoint Pharmaceuticals (EYPT)
We will start in the biotechnology sector with EyePoint Pharmaceuticals, a small cap biopharmaceutical company operating in both clinical and commercial stages. The company is actively developing a new drug for the treatment of several eye conditions, has another product on the market, and recently sold a successful commercial product.
EyePoint has two drug delivery platforms, Durasert and Verisome, which allow long-term injectable drug delivery. The first, Durasert, is used with drug candidate EYP-1901, a potential treatment for wet age-related macular degeneration (AMD) and non-proliferative diabetic retinopathy (NPDR). The second platform, Verisome, is used with commercial-stage product DEXYCU, a drug for the treatment of post-operative inflammation after eye surgeries. The platforms offer the advantage of dosing on a schedule of months, rather than days or hours.
A closer look at EyePoint’s pipeline reveals that the EYP-1901 candidate dominates the company’s research agenda. This drug is the subject of two leading clinical trials: the DAVIO trial, which focuses on the treatment of awAMD, and the PAVIA trial, which targets NPDR. At the end of March, EyePoint completed enrollment in the DAVIO Phase 2 trial, which was described as “oversubscribed”. The publication of the main data is expected by the end of 4Q23. In a recent press release dated June 5, EyePoint announced the completion of enrollment in the Phase 2 PAVIA trial of EYP-1901 for the treatment of NPDR. The trial aimed to enroll 60 patients, but ultimately enrolled 77. Topline data is expected to be released in 2Q24.
Commercially, the drug currently in the company’s commercial stage is DEXYCU, a unique injectable treatment for inflammation that can occur after eye surgeries. DEXYCU experienced a significant decline in product revenue during the first quarter, which was attributed to the end of the pass-through redemption period on January 1 this year. Nevertheless, the company is actively engaged in commercialization activities of the drug.
EyePoint also released results for a second commercial product in 1Q23. This product, YUTIQ, accounted for the majority of the company’s revenue, contributing approximately $7.4 million out of a total of $7.7 million. YUTIQ’s revenue has seen a 60% increase year over year. After the quarter, EyePoint announced in May that it had sold YUTIQ to Alimera Sciences for a total of $82.5 million in cash, plus royalties. The sale enabled EyePoint to repay its outstanding bank debt and extend its cash trail through 2025.
The main story here, however, is about the research pipeline, in the opinion of Cantor analyst Jennifer Kim. She writes about EyePoint: “We draw attention to the EYPT as one of our top picks [for] 2H23. We believe that the management’s continued execution and recent clinical and competitive developments merit further attention ahead of the next key reads: 1) DAVIO 2 Phase 2 Data in Wet Age-Related Macular Degeneration (AMD) in December 23, and 2) the PAVIA phase 2 data in non-proliferative diabetic retinopathy (NPDR) at 2Q24. We continue to believe that the maximum sell opportunity for EYP-1901 is underestimated, and believe the risk/reward balance favors the DAVIO 2 data approach.”
Putting his position in a quantifiable mode, Kim assesses that EYPT shares an overweight (i.e. buy) and sets his price target at $31, implying a strong upside of 240% for the next 12 months. . (To see Kim’s track record, click here)
Overall, the strong rise of this title marked the street; all 5 recent analyst ratings are positive, for a strong buy consensus rating. The stock’s trading price of $9.11 and the average price target of $27.80 combine to suggest upside potential of 205% year over year. (See EYPT stock forecast)
Cogent Biosciences (COGT)
Next, we’ll look at Cogent Biosciences, a precision medicine company focused on treating genetic diseases. These can include autoimmune diseases and other rare diseases, and even a number of dangerous cancers. Typically, these conditions have high unmet medical needs. Cogent works on solutions to improve the quality of life of patients, by targeting the genetic mutations at the origin of the diseases.
The company’s focus on the genetic causes of disease is key to its approach – Cogent seeks to go beyond simply treating symptoms and providing a cure. To that end, the Company’s drug pipeline includes bezuclastinib, a precision drug designed to specifically target exon 17 mutations when found in the KIT receptor tyrosine kinase. The KIT KIT D816V receptor can be locked into an “on” state, causing systemic mastocytosis, or AdvSM. This is a disease in which mast cells accumulate in internal organs. Mutations in exon 17 have also been implicated in GISTs, gastrointestinal stromal tumors. Bezuclastinib is a potent inhibitor of KIT activity and is highly selective in its activity. The drug candidate has shown, in early-stage trials, high potential in the treatment of exon 17-related conditions.
Cogent is currently conducting several clinical trials of bezuclastinib, with a particular focus on the two most advanced trials. The first trial is the APEX Phase 2 trial for the treatment of AdvSM. Part 1 of the ongoing Phase 2 trial has completed enrollment and Part 2 began enrollment in April with a target of 65 patients. The company plans to release data from 30 patients in Part 1 of the APEX trial in the second half of 2023.
The second advanced clinical trial is the Phase 3 PEAK trial in the treatment of GISTs. Data published in June showed a 55% disease control rate in heavily pretreated GIST patients and showed that bezuclastinib in combination with sunitinib was well tolerated with an acceptable safety profile. The company is currently actively enrolling patients in Part 2 of the PEAK trial, with further data expected to be released in 2H23.
Piper Sandler analyst Christopher Raymond is impressed with bezuclastinib, especially the APEX and PEAK trials. In support of the designation of this stock as “Top Pick”, Raymond confidently states, “Our thesis on this name is that the unique mutational selectivity and safety profile of bezuclastinib positions it well within the spectrum of disease. SM. With early AdvSM data comparing favorably to avapritinib, we are confident that updates later this year in both AdvSM and ISM will continue to support bezuclastinib’s best-in-class potential. In GIST, while the ASCO update was early, we believe the thesis is proceeding exactly as hoped, with indications of significant clinical advancement as a combination therapy with sunitinib in GIST 2L. We remain buyers of this name in the face of a number of data risk reduction events this year later.
Unsurprisingly, Raymond assigns Cogent an overweight (i.e. buy) position, while his $22 price target on the stock implies 77% upside potential on the one-year horizon. (To see Raymond’s track record, click here)
Overall, there are 8 recent analyst reviews on this stock and all of them are positive, for a strong unanimous buy consensus. The shares are selling for $12.42 and the average price target of $23.14 implies an 86% gain over the next 12 months. (See COGT Inventory Forecast)
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Disclaimer: The views expressed in this article are solely those of the analysts featured. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.