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2 “Strong Buy” shares traded at significant discounts
Whether the markets go up or down, every investor loves a good deal. There is a pleasure in finding valuable stock at a low and low price – then watching it appreciate in the medium to long term. The key here for investors is to find options where the risk / reward combination will contribute to long term advantage. So how are investors supposed to distinguish between names that are ready to get back on their feet and those that are ready to stay in landfills? That’s what the Wall Street pros are here for. Using TipRanks’ database, we identified two battered stocks that analysts say are preparing for a rebound. Despite heavy losses over the past 52 weeks, both tickers received enough praise from Street to earn a “Strong Buy” consensus rating. 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 conditions in the lungs and bowels, as well as orthostatic neurogenic hypotension. The research programs range from phase 1 to phase 3 trials. Theravance already has YUPELRI on the market as a treatment for COPD. YUPELRI accounts for the lion’s share of Theravance’s revenue, which in the third quarter reached $ 18.3 million. This increased by 47% year over year, and was fueled by a 124% increase in YUPELRI 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 boost share of revenue on a drug with a large potential audience, with asthma affecting more than 350 million people worldwide. Theravance holds royalty rights to Trelegy, with estimated revenues between 5.5% and 8.5% of total revenues. Trelegy was originally approved in the United States as the first once-daily triple-inhaler therapy for the treatment of COPD. Like many biopharmas, Theravance has high overhead costs and its approved drugs are at the start of their profitable life. This keeps net profit and income low, at least in the short term, and leads to a discounted share price – TBPH has slipped 32% in the past 52 weeks. Covering the title of Leerink, analyst Geoff Porges remains bullish on Theravance, primarily due to the combination of its robust pipeline and approved treatments for lung disease. “Theravance’s respiratory drugs are its primary short-term evaluation drivers… We still expect ~ $ 2.4 billion in WW Triple sales at the top (2027E). Beyond the commercial assets / partners of TBPH, the company is also developing an improved inhibitor of JAK (JAKi) in partnership with JNJ (OP) for inflammatory bowel disease (IBD), and a reuptake inhibitor of the norepinephrine and serotonin (NSRI) TD-9855 (ampreloxetine) for neurogenic orthostatic hypotension (nOH). Each of these drugs takes advantage of the novel delivery of unique compounds against proven mechanisms of action and may offer superior safety and / or treatment effect, from their wider therapeutic windows, ”Porges noted. To that end, Porges credits TBPH with an outperformance (i.e. a buy) and gives it a price target of $ 35, which implies an impressive one-year increase of 104%. (To see Porges’ review, click here) Overall, there are 5 reviews on file, and all are up for purchase, which is unanimous in the Strong Buy consensus. TBPH shares are valued at $ 16.95, and their average price target of $ 33.60 suggests a 97% rise from that level. (See TBPH stock market analysis on TipRanks) NiSource, Inc. (NI) We will start with a utility holding company, with subsidiaries in the natural gas and power sectors. NiSource provides electricity and gas to more than 4 million customers in Indiana, Kentucky, Maryland, Massachusetts, Ohio, Pennsylvania and Virginia. The majority of NiSource customers, around 88%, are in the gas industry; the company’s electrical operations serve customers in Indiana only. The company reported third-quarter revenue of $ 902 million, compared to $ 962 in the previous quarter and $ 931 in the previous year quarter. Overall, however, revenues have been in line with the company’s historical pattern: the second and third quarters are relatively weak, while the top line increases with cold weather in the fourth quarter and peaks in the first quarter. This is typical of utility companies in North America. Despite declining year-over-year income, NiSource felt confident enough to maintain its dividend payout, keeping it stable at 21 cents per common share through 2020. That annualizes to 84 cents and gives a 3.8% yield. Not only did the company feel confident to deliver income to shareholders, but it also felt confident to invest heavily in renewable energy resources. The company has a capital spending plan for FY20 exceeding $ 1.7 billion and is heading towards $ 1.3 billion for FY21. These spending will fund “green” energy projects. . NI is currently trading at $ 21.67, a striking distance from its 52 week low. However, one analyst believes that this decline in stock prices offers investors an attractive entry point today. Argus analyst Gary Hovis rates NI a buy with a target price of $ 32. This figure implies an increase of 48% from current levels. (To view Hovis history, click here) “NI stocks appear to be valued favorably at 18.1 times our estimate of 2021 EPS, below the average multiple of 21.6 for electric and gas utilities comparable, “noted Hovis. NiSource could also become a buyout target, as larger utilities and private equity firms bought out smaller utilities due to their stable earnings growth and above-average dividend yields. ” Overall, Wall Street sees a clear path forward for NiSource – a clear fact from the unanimous Strong Buy consensus rating, based on 3 recent reviews from the buyer’s side. The shares are selling for $ 21.68 and the average price target of $ 28.75 suggests an increase of about 32% over the one year period. (See NI Stock Analysis on TipRanks) To find great ideas for battered stocks at attractive valuations, visit TipRanks Best Stocks to Buy, a newly launched tool that brings together all the information about TipRanks stocks. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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