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Goldman Sachs: these two stocks are double or more (or more)
The new week started on a negative note as all three major indices declined from record highs. After the recent strong economic data were applauded, the deteriorating global coronavirus situation engulfed investor sentiment. According to David Kostin, head of the US stock strategist at Goldman Sachs, investors should not get too caught up. The overall trend remains upward, and Kostin points out that volatility – the difference between the highs and lows in the market – is down. He regards the relative predictability of policy, now that the election and behind us is being decided, as more definitive for short-term achievements. “The low volatility has the low correlations between equities outweighing the return on returns to below the long-term average. If the US goes beyond important macro events like the 2020 election, the $ 1.9 billion fiscal stimulus package and the highest economic activity, we expect three the definition of themes for markets is tax reform, infrastructure and price power, “Kostin believes. Taking into account Kostin’s prospects, Goldman Sachs analysts put two stocks on the table, noting that each could double or more in the next year. Using TipRanks’ database, we found out that the rest of the street is on board as well, as each boasts a ‘Strong Buy’ consensus rating. DigitalOcean Holdings (DOCN) We start in high technology, where DigitalOcean is a medium-sized fish among the giants of the sea. The company offers cloud computing services for developers, small to medium-sized businesses and beginners. DigitalOcean cannot compete on a large scale with like Amazon or Microsoft, so the company has promoted simplicity as a virtue. The move has brought some success; DigitalOcean claims more than 570,000 customers worldwide and by the end of 2020 boasts $ 357 million in annual recurring revenue, coupled with 25% year-on-year revenue growth. The company operates 14 data centers in the US and Canada, in the United Kingdom, Germany and the Netherlands, and in India and Singapore. All of this contributes to a solid foundation, and DigitalOcean has recently made use of it in the most direct way possible. The company entered the public markets and held its wallet on March 24 this year. The share price was $ 47, and the company raised $ 775 million. Analyst Christopher Merwin was apt to start covering this stock for Goldman Sachs with a buy rating and a price target of $ 101. At current levels, this target indicates an upward one year of 143%. (To see Merwin’s performance history, click here.) “While we believe some investors are applying a discounted valuation to DigitalOcean due to lower gross margins, we think the approach is too punitive, as Digital Ocean is selling very efficiently. “Marketing and marketing spending was only 10% of revenue in 2020, mainly due to a highly efficient self-service to the market movement and development community that helps reduce the cost of acquiring customers,” Merwin said. The analyst summed up: “With a stronger growth and margin profile, we therefore believe that DigitalOcean should trade at a premium in the mid-growth peer-to-peer set.” In its short time in the public markets, DOCN has garnered ten reviews. These include 8 Buys and 2 Holds, which makes the analyst’s consensus rating a strong buy. The stock costs $ 41.50 with an average target of $ 58.20, which will make the upside potential 40% in the next 12 months. (See DOCN stock analysis on TipRanks) Apellis Pharmaceuticals (APLS) As we shift gears, we look at Apellis, a biopharmaceutical company with a unique niche. Apellis focuses on C3 therapies, with the aim of correcting the overactivation of the complement cascade, a part of the immune system. The complement cascade, or complement, removes damaged cells, promotes inflammation and attacks the cell membrane of pathogens. These activities are handled in sequence by a series of small proteins; Apellis is targeted at C3 to control an overactive supplement system. C3 is the central component of the cascade, and it focuses on three possible pathways for disease states. Apellis’ approach has potential applications in a wide range of medical fields, including hematology, nephrology, neurology, and ophthalmology. The company’s pipeline includes one drug candidate, pegcetacoplan, with a wide range of applications. The drug works directly on C3, and its effective use has recently been shown to be effective by positive phase 3 data in an experiment targeting the rare blood disease paroxysmal nocturnal hemoglobinuria (PNH). In addition to studying the use of pegcetacoplan for PNH, Apellis has five more clinical research projects for the drug candidate. However, the PNH study is the most advanced, and marketing applications for the drug – in the treatment of PNH – are being reviewed by both the FDA and the European Medicines Agency (EMA). The PDUFA date for action by the FDA is May 14 of this year. The result of the Phase 3 PRINCE study, which uses the drug to treat PNH patients, is expected in the second quarter of 21. Among the other applications of Pegcetacoplan, the Phase 3 study for geographical atrophy (GA) is underway, with results expected in the third quarter of this year. Looking ahead, Apellis expects to place three new programs for medical candidates in clinical development by the end of next year. In its Goldman Sachs coverage on this stock, five-star analyst Madhu Kumar considers the pegcetacoplan projects to be key here. We consider APLS as a story of two independent franchises based on the complementary C3 cyclic peptide inhibitor pegcetacoplan. While systemic pegcetacoplan has already delivered clinical POC in PNH in the phase 3 PEGASUS trial, the results of which we believe should support drug approval by the 14 May 2021 PDUFA date, the bigger question this year is whether IVT pegcetacoplan will “Potentially significant market (we are modeling a peak risk-adjusted sales of $ 4.8 billion) of geographic atrophy (GA) in the Phase 3 DERBY / OAKS trials, for which top-line data is expected in 3Q21,” said the analyst. Kumar continued, “Overall, we believe that Apellis offers an interesting risk-reward profile relevant to this 3Q21 data, not because we are convinced of the success of IVT pegcetacoplan … but because we believe that the potential benefit of success is significant, while the disadvantage of failure is limited. “The price rating has a price target of $ 130, which means a solid upward lead of 185% on the stock. (Click here to see Kumar’s record.) Overall, this stock is getting a good rating from Wall Street, with a strong buy consensus rating based on 7 Buys vs. 1 Hold. APLS shares are trading at $ 45.64 and have an average target of $ 73.67 which allows for a 61% increase in the coming year. ( See APLS stock analysis on TipRanks.) To find great ideas for stocks that trade at attractive valuations, visit TipRanks’ best stocks to buy, a newly launched tool that unites all the insights of TipRanks. that are expressed in this article are exclusively those of the proposed analysts.The content is for informational purposes only.It is very important to do your own analysis before investing.