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 warfare, excessive oil costs.
Recent information and market stats have solely strengthened the short-term gloom. Q1 confirmed a GDP decline of 1.6%, and preliminary knowledge reveals an identical decline for Q2, which might put the US right into a recession. But 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 making an attempt to sq. that circle. Acknowledging and analyzing at this time’s market atmosphere, Stoltzfus confronts it head on, writing, “Even in the face of uncertainty and palpable risks of recession, our longer-term outlook for the U.S. economy and the stock market remains decidedly bullish. We believe U.S. economic fundamentals remain on solid footing. U.S. growth should remain well supported by consumer, investment and government 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 Street has to say.
Vertex Energy (VTNR)
First up is Vertex, a transitional power firm with a concentrate on the manufacturing and distribution of each typical and different fuels. The firm owns roughly 3.2 million barrels price of storage capability, in addition to an oil refinery in Mobile, Alabama able to producing 91,000 barrels per day of refined gas. Vertex is a key provider of base oils for the North American lubricant business, and is without doubt one of the largest processors of used motor oil within the US market.
The Mobile refining facility is without doubt one of the keys to understanding Vertex Energy’s present place. The firm 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. Along with the refinery, Vertex acquired a hydrocarbon stock price $165 million, financed in a separate settlement. This acquisition is a significant advance in Vertex’s refining capabilities, and places the corporate in place to start renewable diesel gas manufacturing in 1Q23. The Mobile refinery maintained regular operations by way of the late winter and early spring, whereas the switch of possession was progressing.
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Also 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 acquire of 60%. Earnings, nonetheless, slipped, from a 1-cent acquire per diluted share within the year-ago quarter to an 8-cent loss within the 1Q22 report. Despite the loss, Vertex was in a position to improve its money holdings year-over-year by roughly an element of 10, from $12.52 million to $124.54 million.
In one different extremely constructive announcement made in latest weeks, Vertex in June entered the Russell 3000 inventory index.
Noah Kaye, a 5-star analyst with Oppenheimer, sees every little thing going proper for Vertex at this second, and writes of the corporate: “Vertex is currently experiencing a ‘blue-sky scenario’ on the Mobile acquisition. The company is undertaking a comparatively low-cost renewable diesel capital project at Mobile while intending to continue producing primarily conventional fuels. While attentive to execution risk and spread compression, and seeing questions around the platform’s strategic future, we anticipate a step-change in profitability to enable flexibility for Vertex’s future growth.”
Viewing this inventory as an engine for progress going ahead, Kaye charges it an Outperform (i.e. Buy), and units a worth goal of $18 to counsel a one-year upside of ~52%. (To watch Kaye’s observe report, click on right here)
Overall, it’s clear from the unanimous Strong Buy consensus that Wall Street 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 stage. (See VTNR inventory 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 ailments, by way of safer and simpler orally dosed progress hormone stimulation remedies. The firm’s lone drug candidate, LUM-201, is beneath investigation in medical trials as a therapy for pediatric progress hormone deficiency (PGHD), a severe situation that may result in problems in grownup life. Current remedies for PGHD contain frequent injections over a span of years; Lumos’s orally dosed possibility, if it receives approval from the FDA, will characterize a brand new different for sufferers.
Currently, LUM-201 is present process a number of human medical trials, evaluating its potential. The main trial, the Phase 2 OraGrowtH210 examine, has reportedly reached the 50% randomization milestone. Interim evaluation of this trial is anticipated earlier than the tip of this 12 months, with main consequence knowledge anticipated for launch in 2H23. The different superior trials, the PK/PD trial, or OraGrowtH212, is anticipated to point out interim knowledge evaluation later this 12 months.
Two different trials are at earlier levels. OraGrowth211 is a proposed long-term extension of this trial sequence, and the OraGrowtH213 trial is a change examine which has been initiated to guage transferring LUM-201 sufferers from the rhGH arm of the OraGrowtH210 examine.
Altogether, the info from these research satisfied the FDA in May to raise a partial medical maintain which had been imposed on Lumos’s trial program. The maintain was put in place final summer time, and restricted the medical trials to a 12-month period. With it lifted, Lumos will be capable to performed extra prolonged research, and to provoke new, longer-term medical trials of LUM-201. The firm has plans to conduct the OraGrowtH210 examine over a time period of 24 months, and to increase period of the OraGrowtH212 examine.
All in all, this firm’s place, with a stable drug candidate prospect in a area with a excessive medical want, prompted Oppenheimer’s Leland Gershell to provoke his protection of the inventory with an Outperform (i.e. Buy) score.
Backing his stance, Gershell wrote, “LUMO is positioned to transform the treatment landscape for disorders stemming from growth hormone deficiency (GHD) through the potential introduction of a daily oral medication… We look forward to a Phase 2 interim analysis as well as PK/PD data as key catalysts toward year-end, for which resources provide ample runway. With shares trading at ~cash levels, we recommend investors build a position.”
Looking ahead, Gershell units a $20 worth goal on LUMO shares, implying an upside of 172% on the one-year timeframe. (To watch Gershell’s observe report, click on right here)
The unanimous Strong Buy consensus score on this biopharma inventory is predicated on 4 latest constructive analyst opinions. LUMO is buying and selling for $7.35 and its $24 common worth goal signifies room for a strong 226% acquire from present ranges. (See Lumos 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 individual evaluation earlier than making any funding.
