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Goldman Sachs: these 2 stocks are expected to double (or more)
The new week started with a negative note, as all 3 major indices withdrew from record highs. After applauding recent strong economic data, the worsening global coronavirus situation seems to have heightened investor sentiment. But according to US stock strategist Goldman Sachs David Kostin, investors should not be too busy. The general trend remains upward, and Kostin points out that volatility – the difference between highs and lows in the market – is declining. He sees that the relative predictability of politics, now that the elections are decided behind us, is more definitive for short-term performance. “Low volatility outpaced the low correlations between stocks, leading to the dispersion of long-term below-average profitability. As the US outpaces key macro events such as the 2020 elections, the $ 1.9 trillion fiscal stimulus package and economic activity. At the top, we expect three defining themes for the markets will be fiscal reform, infrastructure and pricing power, “Kostin said. Taking into account Kostin’s prospects, Goldman Sachs analysts are analyzing two stocks, noting that each could double or more in the next year. Using the TipRanks database, I found out that the rest of the street is on board, because everyone is proud of a “strong buy” rating. DigitalOcean Holdings (DOCN) We will start in high-tech, where DigitalOcean is a medium-sized fish among the sea giants. The company offers cloud computing services for developers, small and medium enterprises and start-ups. DigitalOcean cannot compete with Amazon or Microsoft on a large scale, so the company has promoted simplicity as a virtue. The movement brought a measure of success; DigitalOcean claims over 570,000 customers globally and boasted, at the end of 2020, recurring annual revenue of $ 357 million, along with a 25% year-over-year increase in revenue. The company operates 14 data centers, located in the USA and Canada, in the United Kingdom, Germany and the Netherlands, as well as in India and Singapore. All this adds up to a solid foundation, and DigitalOcean has capitalized on it in the most direct way possible recently. The company entered the public markets, holding an IPO on March 24 this year. The shares were priced at $ 47, and the company raised ~ $ 775 million. Analyst Christopher Merwin considered it appropriate to initiate the hedging of these shares for Goldman Sachs with a purchase rating and a target price of $ 101. At current levels, this target suggests a one-year increase of 143%. (To follow Merwin’s track record, click here) “Although we believe that some investors apply a reduced valuation to DigitalOcean due to lower gross margins, we believe this approach is excessively punitive because Digital Ocean has a sales and marketing movement In fact, spending on sales and marketing accounted for only 10% of revenue in 2020, largely due to highly efficient self-service, which is moving in the marketplace and in the developer community, which helps to reduce customer acquisition costs, “said Merwin. The analyst summarized: “With stronger growth and a stronger margin profile, we therefore believe that DigitalOcean should trade at a premium to the average growth peer set. In its short time in the public markets, DOCN received 10 reviews. These include 8 purchases and 2 holdings, which makes the analyst’s consensus assessment a strong purchase. The shares are priced at $ 41.50, with an average target of $ 58.20, which makes the growth potential 40% in the next 12 months. (See DOCN stock analysis on TipRanks) Apellis Pharmaceuticals (APLS) Gear changers, we will look at Apellis, a biopharmaceutical company with a unique niche. Apellis focuses on C3 therapies in order to correct the overactivation of the complement cascade, a part of the immune system. The complement cascade, or complement, cleans damaged cells, promotes inflammation, and attacks the cell membrane of pathogens. These activities are managed by a series of small proteins in order; Apellis targets C3, to control a complementary hyperactive system. C3 is the central component of the waterfall and its targeting addresses three possible pathways for the disease. Apellis’ approach has potential applications in a wide range of medical fields, including hematology, nephrology, neurology and ophthalmology. The company’s conduct includes a drug candidate, pegcetacoplan, with a wide range of applications. The drug acts directly on C3, and its targeted use was recently shown to be effective by positive phase 3 data in a study of paroxysmal nocturnal hemoglobinuria of rare blood disease (PNH). In addition to studying the use of pegcetacoplan for PNH, Apellis has five other clinical research projects underway for the drug candidate. However, the HNP study is the most advanced, and drug marketing applications – in the treatment of HNP – are being examined by both the FDA and the European Medicines Agency (EMA). The PDUFA date for action by the FDA is May 14 this year. The first results from the phase 3 study PRINCE, which uses the drug to treat patients with PNH, are expected in 2Q21. Among other applications of pegcetacoplan, the phase 3 geographic atrophy (GA) study is ongoing, with expected results in the third quarter of this year. Looking to the future, Apellis expects to bring three new drug candidate programs in clinical development by the end of next year. In hedging this stock for Goldman Sachs, 5-star analyst Madhu Kumar sees pegcetacoplan projects as the key here. We see APLS as a story of two independent franchises based on the complement of the C3 cyclic peptide inhibitor pegcetacoplan. While systemic pegcetacoplan has already provided clinical POC in PNH in the PEGASUS phase 3 study, the results of which we believe should support drug approval at PDUFA on 14 May 2021, the bigger question this year is whether pegcetacoplan IVT will succeed. in the potentially considerable market (modeling risk-adjusted peak sales of $ 4.8 billion) of geographic atrophy (GA) in phase 3 DERBY / OAKS studies, for which top data are expected in 3Q21, ”the analyst said. Kumar continued “Overall, we believe that Apellis offers an intriguing risk-reward profile that goes back to these 3Q21 data not because we are convinced of the success of the IVT pegcetacoplan … but because we believe that the potential for success with success is substantial, while the risk of failure is limited. The purchase valuation comes with a price target of 130 USD, which implies a robust increase of 185% per year of the stock. (To follow Kumar’s track record, click here) Overall, this stock gets a firm seal of approval from Wall Street, with a strong buy rating based on 7 Shopping Vs. 1 Storage. APLS shares are trading at $ 45.64 and have an average target of $ 73.67, which indicates room for a 61% appreciation next year. (See analysis of APLS shares on TipRanks) To find good ideas for trading stocks at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all the information about TipRanks shares. Disclaimer: The opinions expressed in this article are only those of the analysts presented. The content is intended for informational purposes only. It is very important to do your own analysis before making any investment.