The US stock market is set to end the week on a high note, adding to optimism as the holidays approach. The positive sentiment stems from news that the White House and Congressional Republicans are nearing the final stages of a deal to raise the government debt ceiling, which currently stands at $31.4 trillion.
A successful debt ceiling bill would quell fears that the U.S. might default on its debt and avert the risks that such an event would pose. Meanwhile, investors still have to contend with turbulent market conditions, including stubborn inflation, high interest rates, a tight labor market and growing fears of a recession.
So how do you find the next hot stock to buy in this environment? One way is to screen stocks that are backed by analysts, especially at big investment banks, such as Wall Street giant Wells Fargo. It may be.
Equity analysts at the firm are optimistic about the outlook by picking what they see as winners next year – those with solid upside potential of up to 70%. using, TipRank databaseWe took a look at two of these Wells Fargo picks to see what stands out.
Stagwell Co., Ltd. (STGW)
Wells Fargo’s first bet is on Stagwell, a firm founded by prominent marketing mogul Mark Penn. Stagwell’s marketing strategy focuses on combining human creativity and data analytics to help us make a more complete understanding of today’s digital world. The company supports its strategy with teamwork and people to provide excellent service to its customers.
Penn originally founded Stagwell in 2015 and completed its merger with MDC Partners in 2021 to become what it is today. Today, Stagwell is transforming marketing through a digital-first approach. The company operates through his network of 70 agents in over 34 countries, serving his more than 4,000 corporate clients worldwide.
A measure of Stagwell’s success can be seen in its total revenue. In 2022, the company’s first full-year operation since the merger of MDC, the top line reached $1.995 billion, with revenue increasing through the second half. But the first quarter of this year yielded different results.
In the first quarter of 2023, Stagwell experienced declines in both revenue and earnings. Quarterly sales were $622 million for him, down 3.3% from the same period last year and more than $24 million short of expectations. In conclusion, the company reported non-GAAP earnings of he 13 cents per share. This was 7 cents below expectations.
On the positive side, Stagwell reported $53 million in “net new business wins” for the quarter and $212 million over the next 12 months. The company ended his first quarter of 2023 with cash on hand for him of $138.5 million.
During the first quarter, Stagwell announced a stock repurchase program. This aims to return capital to shareholders and increase the value of shares by reducing the number of shares outstanding. The number of shares under this program will total 23.3 million shares. During the first quarter of 2023, his first 2.6 million were bought back for a total of $18 million.
All of this caught the attention of Well Fargo analyst Stephen Cahall. He wrote of Mr. Stagwell: We estimate a 3-year organic growth stack (’21+’22+’23E) at +41%, or nearly double the holding cost of larger agencies. STGW also does political advocacy and believes that political spending in 2024 should be in the $10-11 billion range versus $9 billion in 2020. In terms of cost/profit ratio, STGW is an early mover in developing AI tools with a focus on cost savings (he saved $35 million in 2023-24), and Stagwell Marketing Cloud is profitable. Offers high rates of SaaS revenue.
“We believe the trigger for the stock price rally is to execute strong organic growth, reduce leverage, and continue to inject capital into M&A and share buybacks,” the analysts summed up.
Cahall uses these comments to back up his overweight (i.e., buy) rating on the stock, setting a price target of $9, suggesting a 47% upside potential over the year. increase. (To see Cahall’s achievements, click here)
Like Kayhall, the rest of the streets are optimistic. STGW received a consensus rating of ‘strong buy’ as it had 4 buys and no holds or sells. Combined with a trading price of $6.10 and an average target price of $9.75, the stock suggests up to 60% upside potential over the next 12 months. (look STGW Stock Prediction)
Zentaris Pharmaceutical (ZNTL)
Now let’s turn our attention to Zentalis Pharma, a clinical-stage biotechnology company working on new treatments for a variety of cancers. The company uses its proprietary integrated discovery engine to develop new small molecules that form the basis of new, more effective treatments. The company bases its drug candidates on careful analysis of cancer pathways to ensure that potential treatments are on target.
The company’s approach, a careful discovery process with drug candidates with multiple potential uses, enables it to operate in a capital efficient manner. Zentalis’ leading candidate is azenosertib (ZN-c3), a WEE1 inhibitor that has been the subject of eight separate clinical trials.
These trials are testing azenosertib as both monotherapy and combination therapy. Cancers targeted include uterine serous carcinoma, some ovarian cancers, osteosarcoma, and pancreatic cancer.
Upcoming catalysts from the company’s suite of clinical trials include the scheduled release of positive clinical data for azenosertib as combination therapy with chemotherapy for ovarian cancer. Data presentation is scheduled for June 5 at the American Society of Clinical Oncology meeting.
Other upcoming catalysts include the planned release of data on azenosertib as a monotherapy dose in the second half of 2023. The study will provide data on maximum exposure and tolerability, as well as clinical benefit of the drug candidate for a broad range of patients. The company plans to publish data on the combination of azenosertib and drug candidate ZN-d5 in the second half of 2023. The data are being collected from a Phase 1/2 study in the treatment of acute myeloid leukemia. Additional data on the company’s drug candidate ZN-d5 from Phase 1/2 trials for relapsed or refractory light chain amyloidosis are also expected in the second half of 2023.
Analyst Derek Arquilla, who covers the biotech stock at Well Fargo, sees the massive data release coming up as a key point for investors to focus on.
“This is a sleepy stock as there hasn’t been much clinical catalyst out there lately. We might see a big squeeze… we like the dose optimization/RP2D data and the risk/reward ahead of the subsequent ASCO presentation… on our base for both updates the stock price is We think it’s going to be in the mid-$40s (+100%), which means a maximum equity cap of $2.5 billion, which we think is reasonable,” Opined Archila.
All of the above have led Archila to overweight (i.e. buy) ZNTL. In addition, analysts have set a $46 price target on the company, suggesting up to 70% share price gains next year. (To see Archila’s achievements, click here)
It also received a unanimous “strong buy” rating from Wall Street analysts, based on eight recent positive reviews. ZNTL is trading at $26.98 with an average target price of $48.25, implying a gain of up to 79% in 12 months. (look ZNTL Stock Prediction)
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Disclaimer: The opinions expressed in this article are those of the featured analyst only. Content is used for informational purposes only. It is very important to do your own analysis before making any investment.
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