Risk and reward are the yin and yang of inventory buying and selling, the 2 reverse however important substances in each market success. And there are not any shares that higher embody each side – the chance components and the reward potentials – than penny shares.
These equities, priced beneath $5 per share, sometimes supply excessive upside potentials. Even a small acquire in share worth – only a few cents – shortly interprets right into a excessive yield return. Of course, the chance is actual, too; not each penny inventory goes to indicate these kind of beneficial properties, a few of them are low cost for a purpose, and never each purpose is an effective one.
So, how are traders speculated to lock in on compelling performs? That’s what the professionals on Wall Street are right here for.
Using TipRanks’ database, we pulled two penny shares which have amassed sufficient analyst help to earn a “Strong Buy” consensus score. If that wasn’t sufficient, loads of upside potential is at play right here. Let’s take a more in-depth look.
CymaBay Therapeutics (CBAY)
We’ll begin by CymaBay Therapeutics, a biopharmaceutical agency centered on clinical-stage analysis within the therapy of persistent liver illness. The firm has a lead drug candidate, seladelpar, that’s the topic of three separate scientific trials as a remedy for 3 completely different liver situations. The drug candidate, a PPARdelta agonist, is being examined in opposition to main biliary cholangitis (PBC), non-alcoholic steatohepatitis, and first sclerosing cholangitis. Of these, the PBC monitor is the farthest superior.
That scientific path has simply accomplished affected person enrollment for the Phase 3 RESPONSE examine. That examine will consider the security and efficacy of seladelpar as a therapy for PCB sufferers who haven’t responded to or tolerated the present UDCA therapy. The examine includes 180 sufferers in additional than 20 international locations, and outcomes needs to be launched a while subsequent yr.
In addition to the RESPONSE trial, seladelpar can be present process the ASSURE trial, an open-label, long-term examine designed to gather extra long-term security information on the drug. The ASSURE trial at the moment has some 140 sufferers enrolled.
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Finally, CymaBay has a second drug candidate on the scientific stage, MBX-2892. This drug candidate is a GPR 119 agonist, designed to deal with diabetic hypoglycemia. The examine is a Phase 2a proof-of-pharmacology trial evaluating the potential of MBX-2892 within the prevention of hypoglycemia in sufferers with Type 1 Diabetes.
Against this backdrop, Wall Street believes CBAY’s long-term progress narrative is robust and that its $3.26 share worth displays the best entry level.
Covering the inventory for Raymond James, analyst Steven Seedhouse sees the seladelpar trials as the important thing level for CymaBay transferring ahead, believing that the catalysts of upcoming information releases ought to replicate in greater share costs.
“CymaBay completed enrollment of the Phase 3 RESPONSE study evaluating seladelpar in primary biliary cholangitis (PBC), in line with guidance provided on the 1Q22 earnings call… Analysis of the available ENHANCE patient dataset collected through month 3 showed stat sig improvement in the primary composite endpoint and stat sig ALP and ALT normalization, in our view dramatically de-risking the success of RESPONSE. The only pushback on our CBAY pitch as Phase 3 has been enrolling has been ‘too much time to catalyst.’ Now with a flag in the ground (Phase 3 data 2H23E), ~12-month time horizon to an eminently de-risked Phase 3 with a proven end market should be broadly attractive, and we expect CBAY to be totally re-priced in the coming year or much sooner,” Seedhouse opined.
Seedhouse translates his upbeat view of CBAY’s forward prospects into numbers with a $14 price target – which implies a potential upside of 329%. It’s not surprising, then, why he rates the stock a Strong Buy. (To watch Seedhouse’s track record, click here)
Seedhouse is particularly bullish, but he’s no outlier on this stock. All 5 of the recent analyst reviews here are positive, for a unanimous Strong Buy consensus rating, and the $9.80 average price target gives CBAY shares a 199% one-year upside potential. (See CBAY stock forecast on TipRanks)
AbSci Corporation (ABSI)
For the second penny stock we’ll look at, we’ll stick with the medical tech field – but look at a company with a different take on it. AbSci does not directly develop new drugs or therapeutic candidates; rather, the company is focused on the methods of developing new medicines.
AbSci works with artificial intelligence (AI), machine learning (ML), and cell line generation to build a new Integrated Drug Creation™ Platform with potential to transform the way that drug candidates are researched and manufactured. AbSci’s platform can identify novel drug target, discern the optimal biological and therapeutic candidates for those targets, and create the cell lines needed to manufacture the new drugs. Combining these processes into one, more efficient, process offers new pathways toward the next generation of novel therapeutics, including protein-based drugs.
Earlier this year, AbSci entered into a collaboration with Merck for Bionic Enzyme generation. The collaboration has potential to bring AbSci substantial gains, including $610 million in upfront fees, milestone payments, and future royalty payments. On another positive note, the company also announced two new machine learning breakthroughs during the first quarter of this year, which are expected to streamline the drug discovery processes and mitigate risks in new drug development.
So far this year, AbSci has 8 new ‘Active Programs,’ collectively representing 60% year-over-year growth in the company’s research tracks.
Analyst Robyn Karnauskas, writing from Truist, believes the link-up of proprietary AI/ML and bio-development platforms will create a winning combination in the field.
“ABSI’s platform is attractive to Biopharma partners interested in developing next-gen biologics that are unique, faster, and cheaper. Using their internally developed biology and tech platforms iteratively, the company can discover novel biologics which have been optimized to be better drugs — faster. And by using their in-house developed bacteria, they can make novel proteins vs. traditional methods and manufacture them faster, as well as cheaper. While still early, we believe the company’s platform has potential to address several shortcomings of traditional biologics discovery. And given the growing demand for next-gen biologics, we see this as an attractive partner for Biopharma, and an attractive play for both Biotech, as well as Tech investors,” Karnauskas wrote.
Keeping this thoughts, Karnauskas charges ABSI shares a Buy together with an $8 worth goal that signifies her confidence in ~128% one-year share appreciation. (To watch Karnauskas’ monitor document, click on right here)
Overall, Wall Street tends to agree with the bull. The 4 latest analyst evaluations embody 3 Buys and 1 Hold, for a Strong Buy consensus score, and the $14 common worth goal signifies ~299% upside potential from the present share worth of $3.51. (See ABSI inventory 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 essential to do your personal evaluation earlier than making any funding.
