Despite COVID-19's devastating impact on the economy, Goldman Sachs’ chief U.S. equity strategist David Kostin believes 2020 earnings might not be as bad as previously expected. Kostin gave his estimate for S&P 500 earnings per share in 2020 a lift, from $110 to $115. For 2021, the forecast remains at $170, which is 4% above 2019’s realized level, with the figure landing at $188 for 2022.That said, management commentary will be an essential factor in gauging the outlook. “Given the heightened investor focus on the earnings outlook in 2021 and 2022, we expect management commentary will prove more valuable than backward-looking results,” Kostin wrote in a recent note.As for his stock picks, the strategist argues that given the low interest rate environment, names with the longest-duration cash flow are “what you want to own.” These companies include those in the technology and healthcare sectors.Bearing this in mind, we used TipRanks’ database to take a closer look at two stocks that just received Goldman Sachs’ stamp of approval, with the firm projecting upside potential of at least 50% for each.ACM Research Inc. (ACMR)Specializing in wet processing technology, ACM Research has an impressive product lineup designed for a range of applications. Based on its technology, Goldman Sachs sees plenty of growth on the horizon, recently adding the company to its Conviction List.Representing the firm, analyst Allen Chang reminds investors that the company is one of the top wafer cleaning tool makers. Wafer cleaning is done at multiple points during wafer fabrication such as post-etch, post-photoresist and post-CMP, some of the most repeated processes in wafer fabrication.It should be noted that there are some serious heavyweights in this space, namely SCREEN Holdings, Lam Research and Applied Materials. However, ACMR “is the leader among domestic peers in China with 20% of share allocation in YMTC’s cleaning tool purchase.”Chang also mentions that over the past few quarters, it has placed a significant focus on expanding its product offerings and launched a new line of semi-critical cleaning tools, copper plating equipment and furnaces. “These product additions provide scope to expand ACMR’s SAM (serviceable available market) from US$1.5 billion (single wafer cleaning tools only) to US$5 billion per year,” he added.What exactly is driving Chang’s bullish thesis? “Our constructive view on ACMR is based on: 1) its technological strength and proven track record with a high-quality customer base (e.g. SK Hynix), allowing the company to capture more share of local fabs; 2) increasing demand driven by China’s massive investment into semiconductor manufacturing,” he commented. As a result, the analyst expects net profits to increase at a 63% CAGR in 2020E-25E.Even though ACMR’s earnings growth profile is in line with the sector, the stock is trading at 31x/20x the 2021/22E EPS estimates (vs. its China A-Share local SPE peers at above 100x/50x for 2021/22E), making the valuation compelling, in Chang’s opinion.Due to all of the above, Chang rates ACMR a Buy along with a $150 price target. This figure implies shares could surge 76% in the next year. (To watch Chang’s track record, click here)Turning now to the rest of the Street, opinions are split almost evenly. 3 Buys and 2 Holds add up to a Moderate Buy consensus rating. At $87.50, the average price target brings the upside potential to 3%. (See ACM Research stock analysis on TipRanks)Inspire Medical Systems (INSP)Moving to the healthcare sector, Inspire Medical Systems wants to redefine the standard of care for obstructive sleep apnea (OSA). Given its long runway ahead, it’s no wonder this name just scored Goldman Sachs’ stamp of approval.Covering the stock for Goldman, analyst Amit Hazan tells clients that a big part of his bullish thesis is related to its expansion in U.S. reimbursement coverage during the past year, which creates a “path of accelerating growth for Inspire to penetrate its over $10 billion addressable market opportunity for OSA in the U.S.”The analyst added, “Despite our cautious stance on COVID impacts near term, our long-term forecast for implanting facilities to double by 2024 and utilization improvement drives a 5-year sales CAGR of over 25%. In short, this story should gain traction as COVID impacts subside, and we view the current share price as an attractive opportunity for investors.”Looking more closely at the market, about 400 million patients worldwide and 25 million in the U.S. suffer from moderate to severe OSA. Based on the fact that INSP’s unique MIS neurostimulation therapy has been reviewed and clinically validated as a safe and effective alternative for OSA patients who fail CPAP, Hazan believes that the company is well positioned to capitalize on the opportunity.Speaking to the reimbursement coverage, Hazan points out that the commercial side has accelerated, with its covered lines growing from 25 million to 180 million in the last 18 months. “Maybe even more importantly, during 2020, all 7 MACs came out with positive LCDs, which effectively constitutes national Medicare coverage today. We expect the remaining major commercial plans (an additional 70-80 million lives) coming on by the end of this year,” the analyst commented.As broad reimbursement coverage is now in place, INSP is free to focus on execution. To this end, Hazan estimates that the number of centers will double over the next five years. When it comes to utilization, improved reimbursement and increased DTC efforts could lead to a significant boost in annual implants per center.Add in its strong cash position of $175 million as of Q2 2020, and the deal is sealed for Hazan. The analyst rates INSP a Buy along with a $148 price target. Shares could appreciate by 50%, should the analyst’s thesis play out in the coming months. (To watch Hazan’s track record, click here)Overall, out of 7 total reviews published in the last three months, 6 analysts rated the stock a Buy, while 1 said Sell. So, INSP gets a Moderate Buy consensus rating. However, the $96.14 average price target suggests shares could dip 4% in the next twelve months. (See INSP stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
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Yahoo Finance’s Adam Shapiro and Julie Hyman break down the latest earnings reports.India’s top gas importer, Petronet LNG, has renewed its initial deal to consider investing $2.5 billion in U.S. liquefied natural gas (LNG) developer Tellurian Inc’s Driftwood project, Indian sources familiar with the matter said. Petronet and Tellurian now have time until the end of December to finalize the deal, they said. A memorandum of understanding that lapsed on May 31 was renewed last week ahead of a virtual meeting between Indian oil minister Dharmendra Pradhan and U.S. Energy Secretary Dan Brouillette.
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Moleculin Biotech (MBRX) on Tuesday announced that a second round of independent laboratory testing has confirmed the antiviral activity of its drug candidate WP1122 as a potential treatment against coronavirus. The news is pushing shares up 33% to $1.46 in early market trading.Moleculin said that it contracted with IIT Research Institute for additional in vitro testing of its WP1122. The testing involved a cell viability assay in the VERO E6 cell line infected with SARS-CoV-2 and compared the therapeutic effects of 2-deoxy-D-glucose or 2-DG (the active ingredient in WP1122) alone with those of WP1122, a 2-DG prodrug. Results of a previous test earlier this year, showed that 2-DG reduced the virus that causes COVID-19 by 100% in in vitro testing."Having validation in yet another virus host cell line provides additional confidence in the antiviral activity we are seeing,” said Moleculin CEO Walter Klemp. “We are also gaining confidence that in vitro testing results for this class of compounds are significantly affected by the concentration of natural glucose in the microenvironment present during viral replication and continued infection."Based on feedback from the U.S. Food and Drug Administration (FDA), Moleculin believes it may need to show activity in COVID-19 animal models to successfully submit a request for Investigational New Drug (IND) status for WP1122. In addition, the company is working with IITRI to conduct preclinical toxicology testing, which is currently under way.Klemp added that other compounds in its portfolio against SARS-CoV-2 and other life-threatening viruses will also be tested.“We believe WP1122 is promising, but we also don't want to overlook additional opportunities to potentially provide new and better solutions to other viral diseases," he said.Only two analysts have published recent ratings on MBRX- and both rate the stock a buy. Based on an agreement with Sterling Pharma announced earlier this month to produce WP1122 and support development plans to initiate a clinical trial for the potential treatment of COVID-19, Maxim Group analyst Jason McCarthy initiated the stock with a Buy rating and a $2 price target (37% upside potential). (See MBRX’s stock analysis on TipRanks)“WP1122 is unlike other drugs in development for COVID-19 as far as we know, as it targets glucose metabolism, which is key for rapid viral genome production,” McCarthy wrote in a note to investors. “Preclinical work could also support WP1122 for the potential treatment of other viral infections as well as certain cancers.”The analyst expects the company to file IND application with the FDA in 2H20.Related News: NuVasive Spikes 5% After-Hours On Sharp Procedure Rebound Acadia Plunges 12% As Depressive Study Misses Goals; Analyst Says Buy Is Novavax’s (NVAX) Super-High Valuation Justified? This Analyst Says ‘Yes’ More recent articles from Smarter Analyst: * Amazon Officially Confirms Its Prime Day Will Be Postponed * Amazon-Backed Aurora Deploying Self-Driving Vehicles In Texas * Gilead Pours $300M Into Tizona’s Cancer Immunotherapy Pipeline * BD Nabs 177M Injection Order As Countries Ramp Up Covid-19 Vaccine Prep
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Yahoo Finance’s Alexis Christoforous, Brian Sozzi, and Anjalee Khemlani speak with Sorrento Therapeutics CEO & Founder Dr. Henry Ji about the company’s FDA clearance for a COVID-19 drug trial, to be used on patients with milder symptoms.