Stocks can fall for any variety of causes, however profitable traders know to look underneath the hood earlier than bailing out. Some shares will sputter and stall, solely to restart and speed up later. If the underlying enterprise is sound, even a sharp drop in share worth could also be an incident quite than a lasting hit.
But before you purchase a beaten-down inventory, ensure to do your homework first, and discover out what’s behind the inventory’s share value drop.
With this in thoughts, we set out on our personal search for compelling funding alternatives buying and selling at a low cost. Using TipRanks database, we had been capable of finding 2 shares which can be down from their current peaks, whereas some Wall Street analysts consider a turnaround is on the horizon. Let’s take a nearer look.
uniQure N.V. (QURE)
We’ll begin within the biotech sector, with uniQure, a gene remedy firm, researching single-dose, doubtlessly healing, therapies for sufferers with extreme genetic illnesses. uniQure’s two most superior packages are therapies for hemophilia and Huntington’s illness, that are in Phase Three and Phase 1/2 trials, respectively. The therapies are adeno-associated virus-based gene therapies (AAV), developed on a proprietary platform.
The FDA has positioned a maintain on the corporate’s hemophilia B research, following the mid-December security report that recognized a critical adversarial occasion through the HOPE-B Phase Three medical trial of AMT-061. One affected person was identified with HCC (hepatocellular carcinoma, the most typical liver most cancers) through the examine. That affected person had a number of HCC threat elements, together with a lengthy historical past of hepatitis C and B, smoking, and non-alcoholic fatty liver illness. uniQure has since screened over 100 sufferers in all of its hemophilia B packages, together with all 54 sufferers within the HOPE-B examine for liver issues, with damaging outcomes; the corporate and the FDA at the moment are evaluating this occasion. Preliminary indications are, the adversarial occasion was not associated to this particular gene remedy.
uniQure’s different primary pipeline challenge, AMT-130, is a potential remedy for Huntington’s illness, a extreme, genetically associated psychological dysfunction. AMT-130 is present process Phase 1/2 medical trials, with the second dose cohort attributable to begin enrollment in 3Q21. A second medical examine of AMT-130 is scheduled to begin in Europe in 2H21.
Through all of this, QURE shares are down 26% because the FDA maintain on AMT-061. However, analyst Difei Yang, of Mizuho, takes notice of the investigation of the HCC occasion within the HOPE-B trial as a increase for traders.
“[We] believe these analyses suggest that multiple risk factors independent of AAV vector integration likely contributed to the development of HCC. The company submitted these analyses to the FDA, and an update on the clinical hold status could be expected as early as in 2Q21,” Yang famous.
Yang sees the inventory’s present valuation and constructive prospects as cause for optimism.
“[We] see … a favorable risk/reward in the shares given: 1) a positive safety update on the lead HemB program which we see as a de-risking event for the company, and 2) initial efficacy data from the Huntington’s program expected in late 2021/early 2022. We expect this data update to be a closely-watched catalyst following the recent failures of competing ASO programs,” Yang summed up.
To this finish, Yang offers QURE a $52 value goal to go lengthy together with her upgraded stance, indicating a 45% upside potential for the yr forward. (To watch Yang’s monitor report, click here)
The obstacles which have hit QURE in current months are a sort acquainted to followers of the biotech trade, and so the analysts haven’t abandoned this inventory – QURE shares have a unanimous Strong Buy analyst consensus ranking, based mostly on 5 current constructive critiques. The shares are priced at $35.78, with a median value goal of $67.40 suggesting an 88% one-year upside. (See QURE stock analysis on TipRanks)
Ontrack is one other inventory associated to the healthcare trade – however on the client going through finish quite than biotech analysis. Ontrak is within the telehealth area of interest, utilizing an AI-powered platform to trace and monitor sufferers with persistent illness circumstances, recommending behavioral modifications to enhance well being outcomes. The firm combines predictive evaluation and human engagement in its program, and has delivered sturdy price financial savings for greater than half of its enrolled members.
Shares in in Ontrak had been rising via the start of February, however began slipping in the midst of that month. In March, a number of headline occasions started impacting the inventory, and shares dropped 63% from their peak.
The first hit got here when administration, within the This fall earnings pre-announcement, revealed that the corporate’s largest buyer, Aetna, could be terminating its contract in June of this yr. The information pushed the 2021 steerage down, making ahead projections a lot worse than the Street had anticipated. The precise This fall outcomes, nevertheless, confirmed substantial year-over-year will increase in income – This fall’s prime line, at $29.Three million, was up 149% yoy.
The quarterly outcomes had been adopted on March 16 by the announcement that Jonathan Mayhew, Executive VP of CVS, would step up as CEO of Ontrak beginning April 12. Mayhew is a former government from Aetna, and there’s hope that his connections will assist Ontrak to regain its largest contract.
The announcement of Mayhew’s accession to the highest spot at Ontrak prompted 5-star Canaccord analyst Richard Close to improve his ranking on OTRK shares from Hold to Buy.
“[We] view this [the Mayhew hire] as a major positive for Ontrak and validation of the company’s service offering. The addition of Mayhew could enable Ontrak to regain its Aetna Behavioral Health contract for substance use disorder (SUD) and potentially also add anxiety and depression conditions, while also opening up the potential for other populations at Aetna and CVS Health,” Close opined.
The analyst added, “We do note in 2021 the financial optics of losing Aetna still remain, but longer term this hire is very encouraging for Ontrak’s growth, and we believe it will provide the opportunity for multiple expansion from the stock’s historically discounted valuation.”
Close’s feedback again his upgraded stance, and his $46 value goal suggests room for ~33% one-year upside. (To watch Close’s monitor report, click here)
The remainder of the Street leans to the bullish facet. OTRK’s Moderate Buy consensus ranking is predicated on 3 Buys and 2 holds. There’s doable upside of 36%, ought to the goal of $47 be met within the yr forward. (See OTRK stock analysis on TipRanks)
To discover good concepts for shares buying and selling at engaging valuations, go to TipRanks’ Best Stocks to Buy, a newly launched software that unites all of TipRanks’ fairness insights.
Disclaimer: The opinions expressed on this article are solely these of the featured analysts. The content material is meant for use for informational functions solely. It is essential to do your individual evaluation earlier than making any funding.