Even taking recent losses into account, the tech-heavy NASDAQ index is up 28% so far this year, paving the way for an overall bull market. The NASDAQ’s surge was fueled by investors drawn to tech giants.
According to Chris Harvey, head of equity strategy at Wells Fargo, the recovery is solid and will remain so until the Federal Reserve raises interest rates enough to kill it. Harvey notes that inflation, though falling, remains consistently above the central bank’s 2% target rate, and the Fed will almost certainly have to raise rates again later this year – a move that will likely reduce available credit and trigger a recession.
As Harvey puts it, “Tech isn’t going to turn around, the main theme isn’t going to turn around until you break the economy. That’s what happened in 1999, that’s probably what’s going to happen now. And I don’t think you can break the economy until the Fed is more aggressive. So we’ll have some moves, I think we’ll have a pullback in the market, we’ll have a pullback in big tech, but that general theme is still in place and not before the economy crashes.
This offers investors a window of opportunity. Wells Fargo stock analysts point to stocks with high upside potential, up to 125% in some cases, that are currently showing a bullish outlook. We scoured the TipRanks database to gather the latest details on two of their recommendations, which are shown below with accompanying Wells Fargo reviews.
This gives investors a window of opportunity. Wells Fargo stock analysts point to solid bullish stocks, up to 125% in some cases, that look bullish now. We used TipRanks’ database to find the latest details on two of their picks. Here they are, with comments from Wells Fargo.
Bio-Rad Laboratories (ORGANIC)
Say “biotechnology,” and most of us will automatically assume medical research, especially cutting-edge research into new drugs and medical treatments. Bio-Rad Laboratories, however, fills a different, but equally important, niche in biotechnology. The company is a developer and manufacturer of innovative laboratory products for scientific research and clinical diagnostic fields. Bio-Rad has been in business for more than 70 years and has earned a reputation for providing quality products and research tools that keep the nation’s biotechnology laboratories at the cutting edge of technology.
A look at the Bio-Rad product line tells a lot about the story. The company offers products in five categories: life sciences; clinical diagnoses; quality controls; Food and beverage testing; and classroom education. A small sample of the company’s products include a variety of chromatography tools, test systems for autoimmune diagnostics, diabetes, infectious diseases and blood type screening, code quality control tools -bars, data management solutions and veterinary diagnostic and water quality testing kits. In total, Bio-Rad provides all the instruments, software, consumables, reagents and contents necessary for a modern biotechnology laboratory.
In the recently reported 1Q23, Bio-Rad generated revenue of $676.8 million, down 3.3% year-over-year and missing guidance of $12.48 million. dollars. The company’s EPS, in non-GAAP measures, came in at $3.34, 14 cents lower than expected. Looking at the company’s two largest segments, we see that Life Sciences revenue fell 6.8% year-over-year, while Clinical Diagnostics revenue was essentially flat. Together, these two segments accounted for $675.7 million of total revenue.
BIO shares fell more than 16% after the release of first quarter figures, but Wells Fargo analyst Timothy Daley sees it as a chance for investors to buy a quality stock at a relatively low price. . Daley writes: “Investors are underestimating the company’s long-term growth opportunity to improve their earnings and margins, supported by strong business fundamentals and their ability to position themselves opportunistically to benefit from favorable tailwinds. secular growth despite short-term sectoral and macroeconomic headwinds that are temporary in nature.”
“BIO has an attractive portfolio targeting high growth areas in their end markets (i.e. process chromatography, ddPCR, IH-500). They continue to innovate to support growth (i.e. QX Continuum 2H23) and have unique opportunities for long-term margin expansion,” the analyst added.
For Daley, this equates to an overweight (i.e., buy) rating, and his price target of $550 implies that a one-year gain of around 51% awaits BIO shares. (To see Daley’s track record, Click here)
Daley isn’t the only analyst taking a long-term bullish view of Bio-Rad. The company’s stock has garnered 4 recent analyst reviews, all positive, and is earning a strong analyst consensus buy. The shares are currently trading at $365.80 and the average price target of $540.25 suggests potential appreciation of around 48% year over year. (See Forecast of organic stocks)
MorphoSys SA (MOR)
Next up is a biopharmaceutical company, MorphoSys AG. This company, based in Munich, Germany, operates in the United States through its wholly owned subsidiary based in Boston, MorphoSys US, Inc. The company is focused on the development of new cancer treatments, in particular cancers that have proven resistant to current drugs. therapies.
MorphoSys operates at both the clinical and commercial stages, making this biopharmaceutical a double-edged sword for investors. The company has FDA approval for its drug, tafasitamab, specifically for the treatment of relapsed or refractory diffuse large B-cell lymphoma, marketed under the brand name Monjuvi. Monjuvi is also currently being evaluated in various clinical trials for its effectiveness against other types of cancers. Additionally, MorphoSys is actively developing pelabresib, a targeted BET inhibitor, as a treatment for myelofibrosis.
A look at the clinical pipeline shows two important catalysts on the near horizon. The company has completed enrollment in two Phase 3 studies – the MANIFEST-2 trial of pelabresib in the treatment of myelofibrosis and the frontMIND study of tafasitamab/Monjuvi in the treatment of front-line diffuse large B-cell lymphoma. The publication of data from these studies is expected in 4Q23 and 1H24 respectively.
Analyst Derek Archila, in his article on MorphoSys for Wells Fargo, sees great potential there. He is particularly bullish on pelabresib, writing, “Once in a while you can find deep value in SMID biotech, and we like MOR for that reason. With a risk-free Ph3 reading for pelabresib at 4T23 and a peak sales potential of around $1 billion, this is a fascinating story for us… Looking ahead, physicians are interested in the association of pela with other JAKs such as pacritinib and momelotinib, especially if pela demonstrates mod disease. This is what we think is underestimated by the street.
Archila is less enamored with Monjuvi, but points out that the company’s existing marketing structure for the drug sets it up well to introduce pelabresib to the US market. He describes the stock’s current valuation as “an attractive entry point.”
Ultimately, Archila gives MOR stocks an overweight (i.e. buy) rating, with a price target of $17 predicting robust upside potential of 125% year over year. (To see Archila’s prize list, click here)
Overall, this stock has a moderate buy consensus rating from Wall Street, based on 4 analyst analyzes that include 3 buys and 1 sell. The shares are currently priced at $7.50 and their average price target of $11.38 suggests a 12-month upside of around 52% from that level. (See MorphoSys stock forecast)
To find great stock ideas trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that brings together all of TipRanks’ stock information.
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.