By now, everyone knows the litany of market woes and headwinds: inflation, which has been grabbing all of the headlines; the Fed’s flip to fee hikes and financial tightening in response to inflation; the continued checklist of interconnected points, together with provide chain tangles, the Russia-Ukraine struggle, excessive oil costs.
Latest information and market stats have solely bolstered the short-term gloom. Q1 confirmed a GDP decline of 1.6%, and preliminary information reveals the same decline for Q2, which might put the US right into a recession. However do the present clouded situations imply that buyers have to totally again away from the bulls?
Weighing in from Oppenheimer, chief funding strategist John Stoltzfus doesn’t again away from attempting to sq. that circle. Acknowledging and analyzing right now’s market atmosphere, Stoltzfus confronts it head on, writing, “Even within the face of uncertainty and palpable dangers of recession, our longer-term outlook for the U.S. economic system and the inventory market stays decidedly bullish. We consider U.S. financial fundamentals stay on strong footing. U.S. progress ought to stay nicely supported by shopper, funding and authorities spending.”
Taking Stoltzfus’ outlook and turning it into concrete suggestions, the professionals at Oppenheimer are giving two shares a thumbs up. In reality, the agency’s analysts see over 50% upside potential in retailer for every. We used TipRanks’ database to seek out out what the remainder of the Avenue has to say.
Vertex Power (VTNR)
First up is Vertex, a transitional power firm with a give attention to the manufacturing and distribution of each typical and different fuels. The corporate owns roughly 3.2 million barrels price of storage capability, in addition to an oil refinery in Cellular, Alabama able to producing 91,000 barrels per day of refined gasoline. Vertex is a key provider of base oils for the North American lubricant trade, and is likely one of the largest processors of used motor oil within the US market.
The Cellular refining facility is likely one of the keys to understanding Vertex Power’s present place. The corporate bought the refinery from Shell Oil, in a transaction that was accomplished in April of this 12 months. Vertex paid $75 million in money plus $25 million in different capital expenditures. Together with the refinery, Vertex obtained a hydrocarbon stock price $165 million, financed in a separate settlement. This acquisition is a serious advance in Vertex’s refining capabilities, and places the corporate in place to begin renewable diesel gasoline manufacturing in 1Q23. The Cellular refinery maintained regular operations by way of the late winter and early spring, whereas the switch of possession was progressing.
Additionally within the first quarter of this 12 months, Vertex noticed its prime line income develop year-over-year, from $25.05 million to $40.22 million, a achieve of 60%. Earnings, nonetheless, slipped, from a 1-cent achieve per diluted share within the year-ago quarter to an 8-cent loss within the 1Q22 report. Regardless of the loss, Vertex was capable of improve its money holdings year-over-year by roughly an element of 10, from $12.52 million to $124.54 million.
In a single different extremely constructive announcement made in current weeks, Vertex in June entered the Russell 3000 inventory index.
Noah Kaye, a 5-star analyst with Oppenheimer, sees all the things going proper for Vertex at this second, and writes of the corporate: “Vertex is at present experiencing a ‘blue-sky state of affairs’ on the Cellular acquisition. The corporate is enterprise a relatively low-cost renewable diesel capital challenge at Cellular whereas desiring to proceed producing primarily typical fuels. Whereas attentive to execution danger and unfold compression, and seeing questions across the platform’s strategic future, we anticipate a step-change in profitability to allow flexibility for Vertex’s future progress.”
Viewing this inventory as an engine for progress going ahead, Kaye charges it an Outperform (i.e. Purchase), and units a worth goal of $18 to recommend a one-year upside of ~52%. (To observe Kaye’s monitor file, click here)
Total, it’s clear from the unanimous Sturdy Purchase consensus that Wall Avenue likes what it sees in VTNR. The inventory is at present buying and selling for $11.87 and its $22.50 common goal implies ~90% upside potential from that degree. (See VTNR stock forecast on TipRanks)
Lumos Pharma (LUMO)
We’ll shift our focus now to the biopharma sector, the place Lumos is engaged on new therapies for uncommon illnesses, by way of safer and simpler orally dosed progress hormone stimulation remedies. The corporate’s lone drug candidate, LUM-201, is underneath investigation in medical trials as a therapy for pediatric progress hormone deficiency (PGHD), a severe situation that may result in problems in grownup life. Present remedies for PGHD contain frequent injections over a span of years; Lumos’s orally dosed choice, if it receives approval from the FDA, will characterize a brand new different for sufferers.
Presently, LUM-201 is present process a number of human medical trials, evaluating its potential. The main trial, the Part 2 OraGrowtH210 research, has reportedly reached the 50% randomization milestone. Interim evaluation of this trial is anticipated earlier than the tip of this 12 months, with main end result information anticipated for launch in 2H23. The opposite superior trials, the PK/PD trial, or OraGrowtH212, is anticipated to point out interim information evaluation later this 12 months.
Two different trials are at earlier levels. OraGrowth211 is a proposed long-term extension of this trial collection, and the OraGrowtH213 trial is a swap research which has been initiated to judge shifting LUM-201 sufferers from the rhGH arm of the OraGrowtH210 research.
Altogether, the information from these research satisfied the FDA in Could to raise a partial medical maintain which had been imposed on Lumos’s trial program. The maintain was put in place final summer season, and restricted the medical trials to a 12-month length. With it lifted, Lumos will have the ability to carried out extra prolonged research, and to provoke new, longer-term medical trials of LUM-201. The corporate has plans to conduct the OraGrowtH210 research over a time period of 24 months, and to increase length of the OraGrowtH212 research.
All in all, this firm’s place, with a strong drug candidate prospect in a discipline with a excessive medical want, prompted Oppenheimer’s Leland Gershell to provoke his protection of the inventory with an Outperform (i.e. Purchase) score.
Backing his stance, Gershell wrote, “LUMO is positioned to remodel the therapy panorama for problems stemming from progress hormone deficiency (GHD) by way of the potential introduction of a day by day oral remedy… We stay up for a Part 2 interim evaluation in addition to PK/PD information as key catalysts towards year-end, for which assets present ample runway. With shares buying and selling at ~money ranges, we advocate buyers construct a place.”
Wanting ahead, Gershell units a $20 worth goal on LUMO shares, implying an upside of 172% on the one-year time-frame. (To observe Gershell’s monitor file, click here)
The unanimous Sturdy Purchase consensus score on this biopharma inventory is predicated on 4 current constructive analyst evaluations. LUMO is buying and selling for $7.35 and its $24 common worth goal signifies room for a sturdy 226% achieve from present ranges. (See Lumos stock forecast on TipRanks)
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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 rather essential to do your individual evaluation earlier than making any funding.
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