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The decline in these 3 stocks is a “buying opportunity,” analysts say
The investment game is seldom simple sailing. While investors undoubtedly want the choices that make up their portfolio to keep increasing, the reality is more complicated. There are times when even stocks of the world’s most successful companies have been on a downward trend for one reason or another. While watching a stock you own drift down isn’t fun, any savvy investor knows that the pullback is often a gift in disguise when company fundamentals are solid to begin with. This is where the chance of strong returns really comes into play. “Buy the Dip” is not a cliché for no reason. With that in mind, we scoured the TipRanks database and picked three names that have been heading south recently, especially those that have been viewed by those in the know as a buying opportunity. Additionally, all 3 are rated as Strong Buys by the analyst consensus and are expected to generate at least 70% of profits over the next 12 months. Here are the details. Flexion Therapeutics (FLXN) First, let’s look at Flexion, a pharmaceutical company that specializes in developing and commercializing therapies for treating musculoskeletal pain. The company has two drugs that are currently in early clinical trials, but one of which has already been approved by the FDA. Zilretta is an extended-release corticosteroid used to treat knee pain associated with osteoarthritis. The drug received regulatory approval in 2017 and Flexion has exclusive worldwide rights. The FLXN share found 2021 difficult and has fallen 30% since the start of the year. However, the “recent weakness,” says Northland analyst Carl Byrnes, has created a “unique buying opportunity.” Like many biopharmaceuticals, Flexion’s marketing efforts were hit hard at the height of the pandemic last year as operations were impacted by downtime and restrictions. However, Byrnes anticipates that Zilretta will “see outstanding growth in 2021 and beyond”. “We remain very confident that the demand for ZILRETTA will continue to grow. This will be fueled by the product awareness and positive clinical experiences of both patients and HCP. This will be achieved through improvements in HCP interactions and the postponement of surgical Interventions for knee endoprosthetics (TKA) intensified, “said the analyst. Byrnes expects Zilretta’s revenue to increase 45% year over year to $ 125 million in 2021 and increase another 50% to $ 187.5 million the following year. This growth in sales will go hand in hand with a massive appreciation of stocks. Byrne’s target price is $ 35, which indicates an upside of ~ 339% over the next 12 months. Needless to say, Byrne’s rating is outperforming (i.e. buying). (To see Byrnes’ track record, click here.) Aside from a single hold, all of Byrne’s colleagues agree. With 9 purchases, the FLXN share has a strong buy consensus rating. The average price target of $ 20.22, while not as optimistic as Byrne’s target, is expected to deliver an impressive 153% return over the 12 month period. (See FLXN stock analysis on TipRanks) Protara Therapeutics (TARA) Next, we stay in the pharmaceutical industry and have Protara. In contrast to flexion, no therapies have yet been approved for biotechnology, which is aimed at cancer and rare diseases. However, the picture should soon become clear regarding the timing of a BLA (Biologics License Application) for TARA-002, the company’s cellular test cell therapy for a rare pediatric indication – lymphatic malformations (LM). TARA-002 is based on the immune potentiator OK-432, which is currently approved in Japan and Taiwan as picibanil for the treatment of several cancer indications as well as LM. Protara is currently trying to get the FDA to accept that TARA-002 is comparable to OK-432. If everything goes according to plan, the company expects a possible BLA filing in H2: 2021 and a possible approval in H1: 2022. Protara shares have fallen 40% since the beginning of the year. However, Guggenheim analyst Etzer Darout believes the stock is significantly undervalued. “We estimate peak risk-adjusted sales in the US alone at ~ $ 170 million (75% PoS) (biologics exclusivity through 2034-2035),” said the 5-star analyst. “The company has presented a no additional study scenario that estimates a US launch in 2022 and a scenario with additional registration studies that estimates a launch in 2023. We see the current level as a buying opportunity ahead of clarity the regulations for LM. ” In addition, Tara is expected to submit an IND (new investigational drug) for a Phase 1 study for TARA-002 in 2H21 for the treatment of non-muscle invasive bladder cancer (NMIBC). Darout notes that 80% (~ 65,000) of all newly diagnosed bladder cancer patients have this specific condition, including ~ 45% who are “high-grade and have high unmet needs”. The company also owns IV Choline, a Phase 3 product for which the FDA has granted both orphan drug designation and fast track designation for IFALD (intestinal failure-associated liver disease). Based on all of the above, Darout rates TARA with a buy and has a target price of $ 48 on the stock. The implication for investors? Up from a strong 225%. (To see Darout’s track record, click here.) Overall, TARA receives a strong buy from the analysts’ perspective with 3 current buy ratings. The stock is also supported by an optimistic average price target; At $ 43.67, the stock is expected to gain ~ 198% over the coming year. (See TARA stock analysis on TipRanks) Green Thumb Industries (GTBIF) Last but not least, Green Thumb, a leading US cannabis MSO (multi-state operator). The Chicago-based company is one of the companies in the burgeoning cannabis sector. It has the second highest market cap in the industry and has seen impressive growth over the past year. In 2020, revenue increased 157% from 2019 to $ 556.6 million. Despite another excellent quarterly statement in March and well positioned to benefit from more states legalizing cannabis, the stock recently pulled back after the company was hit by a damn article from the Chicago Tribune. According to the Chicago Tribune, the company is being investigated by overpaid “pay-to-play” payments related to obtaining cannabis licenses in Illinois. Against the allegations, GTBIF management said the allegations were unfounded and there was no factual evidence to support them. In addition, the company pointed out that it had not even been contacted by the authorities on the matter. Then who should you believe? According to Roth Capital’s Scott Fortune, this is an easy choice. “We believe these faint claims are an opportunity to own the industry-leading operator, which is currently 25% below its recent highs,” said the 5-Atar analyst. “In our view, the GTI business and track record of execution is not at risk in relation to the seemingly baseless allegations. We will continue to monitor any additional additional evidence that may emerge, but we believe the allegations are unfounded. We believe the upside opportunity at these levels remains compelling. “Following Fortune’s target price of USD 45, the shares are now changing hands for a premium of 70% per year. Fortune’s rating remains a buy. (To see Fortune’s track record, click here.) The negative news has done little to dampen enthusiasm for this stock on Wall Street. Analysts’ consensus rates GTBIF as a strong buy based on a unanimous 12 purchases. The average price target of $ 47.71 indicates an upward movement of 79% over the next 12 months. (See GTBIF stock analysis on TipRanks.) To find great ideas for trading stocks at attractive valuations, visit TipRanks’ Best Stocks to Buy, ‘a newly launched tool that brings together all of TipRanks’ stock insights. Disclaimer: The opinions expressed in this article are solely those of the analysts presented. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.