JPMorgan: 2 stocks for great long-term earnings
JPMorgan CEO Jamie Dimon said the US is on the verge of an economic upturn that should fuel growth at least until 2023. Dimon attributes the prospect of strong growth to a number of reasons. “I have little doubt that the US economy is likely to boom towards the end of the pandemic with excessive savings, new economic cuts, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria,” Dimon said recently. Although Dimon also noted that equity market valuations are “quite high,” the fact that markets are pricing in economic growth and excess savings that could be parked in stocks suggests that a multi-year boom may justify that current level could serve. Accordingly, JP Morgan analysts took this opportunity to focus their long-term perspective on two stocks that they expect to see oversized growth. We ran JPM’s stock picks through the TipRanks database to see what the rest of the street does with these decisions. It turns out that JPM is not alone. The consensus is that both names are strong buys and will generate massive returns – at least 90% over the next 12 months. Let’s dive in. CytomX Therapeutics (CTMX) We’re starting with CytomX, a clinical stage biopharmaceutical company with high ambitions. CytomX aims to revolutionize cancer treatment and is based on its proprietary Probody Technology Platform on therapies. Directly targeting the tumor microenvironment, Probody generates conditionally activated biologics, which localizes the treatment of the tumor more effectively while keeping the activity in healthy tissues under control. CytomX has a pipeline of multiple drugs in various stages of development. Praluzatamab (CX-2009), a pro-body drug conjugate (ADC) against CD166 (a molecule expressed in solid tumor cells), is in a phase 2 clinical trial for the treatment of breast cancer. In addition, the company and its partner AbbVie are jointly developing CX-2029, a PROBODY drug conjugate against CD71 (transferrin receptor). The drug is in phase 2 trials for the treatment of non-small cell squamous cell carcinoma, squamous cell carcinoma of the head and neck, cancers of the esophagus and gastroesophageal junction, and diffuse large B-cell lymphoma. The Probody platform forms the basis for JP Morgan’s Anupam Rama work for CytomX. “In our view, the platform is at risk not only from known clinical data for the conductivity praluzatamab ravtansine (CX-2009) / CX-2029, but also from external partnerships with companies such as AbbVie (for CX-2029), Amgen, Bristol, Myers Squibb and Astellas. Remarkably, we are viewing early data for lead development candidates praluzatamab and CX-2029 in multiple tumor types as interesting early proof of concept, “said Rama. Both praluzutamab and CX-2029 have “shown early clinical activity” and will have 21 Phase 2 readings in the fourth quarter. Rama believes the street has been underestimating results so far “due to uncertainty about the ultimate therapeutic window of these assets”. The ads could change all of that and have the potential to “further validate not only the programs individually, but the platform as well”. “Important,” added Rama, “we want to point out that the Phase 2 updates in 4Q21 are important for both products, not only to understand the therapeutic window for each product, but also to learn important metrics for the model , such as durability. ” For this purpose, Rama rates CTMX at an overweight (i.e. buy) along with a price target of $ 14. Investors can earn a 98% return if that value is reached in the next 12 months. (To see Rama’s track record, click here.) In the past 3 months, 3 other analysts ran a CytomX test and they all agree – they recommend buying. At $ 14, the average target price is in line with Rama’s, providing solid support for the stock’s Strong Buy consensus rating. (See CTMX stock analysis on TipRanks) Kala Pharmaceuticals (KALA) The next JPMorgan pick we look at is Kala Pharmaceuticals. The company is focused on developing therapies for eye diseases and has two FDA-cleared products on the market. Inveltys, Kalas eye drops for post-operative inflammation / pain, was approved in 2018 and launched in 2019. Last October, the FDA approved Eysuvis, the company’s treatment for signs and symptoms of dry eye disease (DED). Eysuvis was launched in January and is currently the only FDA-cleared prescription treatment for this condition. After speaking to Kala management, JP Morgan’s Christopher Neyor notes that the response so far has been excellent. “Kala continues to receive very strong positive feedback on the initial launch of Eysuvis from key stakeholders, including patients and clinicians, who focus on the two most common issues: (1) Rapid onset of the product’s effects, with many patients having a Symptom relief reports daytime and (2) comfort of the eye drop with no significant tolerability issues, which is in stark contrast to the burning, stabbing, and blurred visual symptoms associated with other dry eye therapies, ”Neyor wrote. Neyor said the dry eye market is a significant opportunity with around 17 million patients diagnosed in the US. The analyst’s “conservative” long-term peak sales forecast for Eysuvis is over $ 750 million, and Neyor expects sales to see a strong surge in the second Halfway through the year, should “jeopardize the company’s dry eye commercialization plans.” Underpinned by Eysuvis, Neyor sees a “very favorable risk / return for Kala”, which is reflected in a bullish price target. At $ 17, the number is intended to reward investors with a 12-month return of 125%, should Neyor’s thesis have an impact. Unsurprisingly, Neyor was overweight (i.e. bought) stocks. (To see Neyor’s track record, click here.) Looking at the consensus breakdown, the JP Morgan analyst’s forecast appears on the more conservative end of the spectrum. Given the average price target of $ 26, stocks are expected to rise ~ 262% in the coming year. Kala’s consensus strong buy rating is based on 4 unanimous purchases. (See TipRanks kala stock analysis.) To find great ideas for trading stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all of TipRanks’ stock insights. Disclaimer: The opinions expressed in this article are solely those of the presented analysts. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.