Less than two weeks into the brand new 12 months, the important thing query is coming clear: ought to we purchase the dip? The markets are swooning a bit, to this point in January. Both the S&P 500 and the NASDAQ are registering losses in 2022’s cumulative buying and selling classes – 2% on the S&P, and 4.5% on the NASDAQ.
A mixture of headwinds and tailwinds are pushing on equities. The former embrace the Omicron wave of COVID-19, in addition to ongoing disruptions within the provide chains and labor markets. On the optimistic facet, Omicron is wanting each much less harmful and extra contagious, resulting in the potential of mass pure immunity with much less dying, and marking an finish in sight for the pandemic. And, the Federal Reserve is signaling that it’ll start elevating rates of interest later this 12 months. That transfer guarantees to place damper on rising inflation charges, with long-term advantages.
Overall, there may be room for optimism, as identified by JPMorgan’s international markets strategist Marko Kolanovic: “We believe there is further upside for stocks and the dip driven by the Omicron scare should be bought into. The new variant is proving to be milder, and the adverse impact on mobility much more manageable.”
Turning to the overall financial scenario, Kolanovic provides, “Inventories are very low and the labor market is staying strong. We continue to see gains for earnings, and believe that consensus projections for 2022 will again prove too low.”
With this in thoughts, we wished to take a more in-depth take a look at two shares that obtained JPMorgan’s stamp of approval, with the agency projecting upside potential of greater than 80% for every. Using TipRanks’ database, we discovered that the remainder of the Street can also be on board as each have earned a “Strong Buy” consensus ranking.
Driven Brands Holdings (DRVN)
We’ll begin with Driven Brands, North America’s largest automotive providers firm. Driven Brands is a holding firm, working a variety of auto service places via its subsidiaries. The providers are supplied in 4 divisions, together with Maintenance; Paint, Collision, & Glass; Platform Services; and Carwash. Brands embrace well-known names resembling Meineke, Take 5 Oil Change, Maaco, and Automotive Training Institute. There are over 4,200 model places, most owned and operated on a franchise foundation.
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Driven held its IPO in January of final 12 months, and raised over $650 million in web proceeds from the providing. The firm’s inventory has been risky over the previous 12 months, however stays properly above the preliminary pricing of $22.
Since the IPO, Driven has launched 4 quarterly monetary studies. Revenues rose via the summer season; the Q3 end result, of $371 million, was up 39% year-over-year, and same-store gross sales rose 12.8%. Adjusted earnings got here in optimistic, at 26 cents per share, up by 30% yoy. The firm added 53 shops through the third quarter.
This development comes hand-in-hand with the financial reopening. As folks get out and transfer round, they drive – and meaning their automobiles will want upkeep and equipment. The firm’s development continued after Q3; since that quarterly launch, the corporate has introduced expansions in its carwash and auto glass segments. The firm in November acquired its a hundredth automobile wash since August 2020, and now boasts over 300 automobile wash places, whereas earlier this month Driven introduced its acquisition of Auto Glass Now, with 75 places within the auto glass restore phase.
JPMorgan’s 5-star analyst Christopher Horvers is bullish on DRVN for this 12 months, writing of the inventory: “We continue to see DRVN as one of the most differentiated stories in our coverage… DRVN checks many boxes in 2022 given: (1) supportive recovery dynamics (i.e., miles driven still below 2019 with congestion miles lagging), (2) pricing power largely offsetting cost inflation (labor and goods), (3) fewer competitors post-COVID, (4) material upside bias to estimates, (5) potential for structural valuation re-rating, and (6) a general defensive bias emphasizing perceived asset quality.”
In line with his optimistic approach, Horvers gives DRVN shares an Overweight (i.e. Buy) rating and his $15 price target suggests an impressive ~83% potential upside for the coming year. (To watch Horvers’ track record, click here)
Overall, there are currently 4 analyst reviews of Driven Brands on record, and they all agree: this is a stock to Buy. This makes the Strong Buy consensus rating unanimous. DRVN shares are selling for $30.54, and their $45 average price target implies they have a one-year upside potential of ~47%. (See DRVN stock analysis on TipRanks)
Edgewise Therapeutics (EWTX)
The second stock we’ll look at is Edgewise Therapeutics, a clinical stage biopharma company with a focus on the treatment of musculoskeletal diseases. The company is developing orally dosed, small molecule novel therapies for rare muscle disorders with severe, debilitating effects. Targeted disorders include Duchenne and Becker muscular dystrophy (DMD and BMD), spasticity disorders, and neuromuscular metabolic disorders.
Most of Edgewise’s research tracks are still in preclinical testing, but the DMD/BMD program has reached Phase 1 clinical trials. Topline results from EDG-5506, a drug candidate in the muscle stabilizer class, were released earlier this month, and showed that the drug candidate was well tolerated in patients, with no adverse events occurring. The drug also showed significant achievement, beyond predicted levels, of muscle concentrations and reduced muscle damage biomarkers in adult BMD patients after two weeks of dosing. These are important positive results for a first-in-human clinical trial, and justify further trials with EDG-5506.
JPMorgan’s Tessa Romero describes the clinical trial data as a ‘win,’ noting: “In our view, key aspects that made the update a clear success include: 1) significant and time-dependent lowering of key muscle damage biomarkers; 2) favorable PK consistent with robust target engagement (e.g., achieving exposures exceeding pharmacologically active levels seen in diseased pre-clinical models, in both the plasma/muscle); and 3) noun expected safety/tolerability concerns.”
“With initial proof-of-concept (POC) data with EDG-5506 aided by both biological and functional markers of response in hand, we see the potential for substantial value creation over time on the potential of EDG-5506 alone, with a substantial platform to follow behind it,” Romero summed up.
In line with these comments, Romero lists Edgewise as a “top idea” for 2022. The JPMorgan analyst charges the inventory an Overweight (i.e. Buy) together with a $33 worth goal. Should the goal be met, a twelve-month acquire within the form of an 82% could possibly be in retailer. (To watch Romero’s observe report, click on right here)
All in all, Edgewise has a Strong Buy consensus ranking, based mostly on three analyst evaluations given just lately. The shares are buying and selling for $18.10 and have a mean worth goal of $32, implying an upside over the following 12 months of ~77%. (See EWTX inventory evaluation 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.