In a bearish market, there are few scenarios more attractive to investors than those that outline that the bearish sentiment is about to turn positive. And according to Ari Wald, head of technical analysis at Oppenheimer, we’re on the cusp of such a reversal right now.
“Our analysis shows that September’s weakness signals a final leg lower in the bear cycle and an upside opportunity for long-term investors,” Wald recently explained. “In the postwar era, the majority of bear cycles were long and shallow or short and sharp. We have measured only four long and deep declines (1968, 1973, 2000 and 2007) and believe that market conditions are stronger now than during those periods of extreme periods.”
With that in mind, here are two stocks that Wald’s fellow analysts at the investment firm have called attractive right now. With the help of the TipRanks platform, we can gauge the rest of Wall Street sentiment for these names. Here are the details.
Let’s first take a look at software specialist HashiCorp – a cloud automation software provider, to be more precise.
HashiCorp provides open source tools that integrate with and extend the services provided by public cloud service providers such as Amazon and Microsoft. Terraform, which configures infrastructure, and Vault, which handles password management, are two examples of the company’s nine separate products aimed at different segments of the cloud infrastructure industry. The products are on trend as given the ongoing digital transformation, businesses are now leaning towards using more than one cloud provider.
HashiCorp is relatively new to the public markets, having held its IPO in December 2021, when the company boasted a market capitalization of around $14 billion. But, as has been the case for many, the stock has been unable to buck the market’s bearish trends and is down 63% since its debut.
That hasn’t stopped the company from producing strong quarterly results, as it did in its recently delivered second quarter fiscal 2023 (July quarter) statement.
Revenue came in at $113.9 million, $11.56 million above Wall Street expectations and up 52% year over year. Performance was boosted by increased sales from customers with more than $100,000 in ARR (annual recurring revenue) and a record 134% year-over-year increase in NDRR (net dollar retention rate). Non-GAAP EPS of -$0.17 easily beat the Street’s estimate of -$0.31. Adding an extra layer of gloss, for FQ3, the company currently expects revenue between $110 million and $112 million compared to consensus expectations of $106.48 million.
These are the results that excite Oppenheimer’s Ittai Kidron, who applauds the performance in the face of “macro headwinds.”
The 5-star analyst writes, “HashiCorp continues to demonstrate its increasing relevance to large enterprises as they shift to the cloud. We believe management’s guidance incorporates a measured perception of macroeconomic realities and is encouraged by a renewed focus on increasing operating leverage. We remain bullish and believe HashiCorp is in the early stages of addressing a tremendous growth opportunity.”
To that end, along with an Outperform (i.e. Buy) rating, Kidron’s $50 price target suggests the shares have room for 66% growth over the next year. (To follow Kidron’s history, Click here)
Looking at the consensus analysis, out of the 9 ratings recorded, 4 currently prefer to leave it, but with the addition of 5 positive reviews, the stock claims a consensus rating of Moderate Buy. Most believe the stock is undervalued at its current trading price. following the average target of $44.67, the shares will change hands at a premium of 48% annually from now. (See HashCorp stock prediction on TipRanks)
IDEAYA Biosciences (IDYA)
Let us now turn to something quite different for Oppenheimer’s second choice. IDEAYA Biosciences is a synthetic precision medicine company focused on mortality. It focuses on the discovery and development of targeted oncology drugs for patient populations identified using molecular diagnostics. In order to select the patient populations most likely to benefit from the company’s drugs, its approach combines skills in translational biomarker identification and validation with small molecule drug discovery.
IDEAYA has several drugs in preclinical development and two that have already moved into clinical trials.
These include darubazirtinib, a protein kinase C (PKC) inhibitor, intended to treat genetically determined cancers that have GNAQ or GNA11 gene mutations. This drug is in a Phase 2 study targeting metastatic uveal melanoma (MUM), in combination with Crizotinib, a cMET inhibitor developed by Pfizer. Data from the study are expected soon, and if the readout is positive, a MUM enrollment trial will likely follow.
The other asset making progress is IDE397. This treatment is indicated for patients with methylthioadenosine phosphorylase (MTAP) deletion – a group of patients representing approximately 15% of all solid tumors. This investigational, potentially best-in-class, small molecule MAT2A inhibitor is being evaluated in an ongoing Phase 1/2 clinical trial.
Matthew Biegler’s Oppenheimer thesis on IDYA has focused on the potential of the latter, but the analyst is increasingly confident that the former could deliver the goods as well, despite admitting that darovasterib is a bit of a “dark horse” after the modest results of monotherapy. However, Biegler believes the crizotinib combination could surprise the naysayers.
“We spoke with management ahead of updates from the combination trial of the PKC inhibitor darovasertib, due in September,” the analyst said. “We support the program, aided by a better assessment of the market opportunity for uveal melanoma and the strength of the initial data set from December … We believe that strong data, along with specific regulatory guidance, can help win over persistent skeptics — and we are increasingly bullish on the outlook.”
Accordingly, Biegler rates IDYA as Outperform (Buy) supported by a $22 price target. The implications for investors? Up a whopping 134%. (To track Biegler’s history, Click here)
Most of Biegler’s colleagues agree. While one analyst remains on the sidelines, the remaining 4 reviews are positive, making the consensus view here a strong buy. The forecast calls for a 94% gain for one year, considering the average price target is at $18.20. ((See IDEAYA Biosciences stock prediction on TipRanks)
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Disclaimer: The views expressed in this article are solely those of the featured analystsmall. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.