The stock market is regularly influenced by broader macro developments, but that only paints part of the picture. While general market conditions can push any stock down, if you zoom in, you’ll notice that each stock writes its own story, with its own reasons for ups and downs. Smart investors will make sure they do background research and learn. idiosyncratic reasons, before purchasing.
Recognizing this, we turned to some recommendations from Wall Street analysts for clues to two stocks that are down, but not out yet. They’ve all suffered big losses this year for one reason or another, but it seems certain analysts believe these stocks are now too cheap to ignore as they believe they offer investors triple-digit upside potential versus of their current trading price.
Furthermore, there is a broad view on Wall Street that these are worth watching at the moment; According to the TipRanks database, both are also rated Strong Buys by the analyst consensus, with a lot of upside potential expected. Here are the details.
Aerovate Therapeutics (AVTE)
First on our list is Aerovate, a clinical-stage biopharmaceutical company focused on improving treatments for rare heart and lung diseases. The company is currently working with the existing cancer drug imatinib as a treatment for pulmonary arterial hypertension (PAH), which is severely elevated blood pressure in the lungs caused by blockages in the small arteries. The drug has been used in patients as an orally dosed treatment; In an innovation, Aerovate works with imatinib as a dry powder inhaler. Although PAH is a rare condition, it has a significant patient base: more than 70,000 people in the US and Europe are affected by the disease.
The company’s approach offers two key advantages over standard oral formulations for treating lung conditions. First, imatinib is known to have systemic side effects and even potential toxicity. The inhalation approach, by delivering the drug directly to the site of action in the lungs, minimizes these potential problems. And secondly, by using the inhaled dose, Aerovate delivers a higher dose to the affected parts of the lung much faster than is possible with a pill. As a result, the patient can use a lower dose to begin with – which goes back to the first point of minimizing adverse side effects.
AV-101, Aerovate’s lead product, is a self-administered dry powder inhaler currently being investigated in the IMPAHCT study, a global Phase 2b/3 trial for the treatment of PAH. The company reports continued progress in the study, which includes more than 110 clinical sites in more than 20 countries, with more clinical sites planned for activation. Aerovate expects to release key data from the Phase 2b component of the IMPAHCT trial in the second quarter of 2024.
We should note that Aerovate is a research-oriented company, with high overhead costs and consistent quarterly losses. Such biotech stocks without near-term catalysts can be volatile, which is to say, shares in AVTE are down 54% so far this year.
The company also uses at-the-market (ATM) stock sales as a way to raise money. In the second quarter of 2023, the company sold $45 million worth of shares. As of June 30 this year, Aerovate reported that it had $150.1 million in cash and other liquid assets on hand, and claims there is sufficient cash available to continue operations through 2026.
For Guggenheim analyst Vamil Divan, the key point here is AV-101’s high commercialization potential. He writes about Aerovate and its lead product: “We remain optimistic about the clinical and commercial potential of AV-101 as the company works to leverage the efficacy of oral imatinib with a more targeted delivery approach directly to the lungs that would eliminate systemic toxicities. should minimize. We see a meaningful role for AV-101 in addition to current PAH treatment options, and believe that AV-101’s mechanism of action should allow it to be used in combination with MRK’s sotatercept or in patients who develop or cannot tolerate sotatercept .”
Looking ahead, Divan rates AVTE stock a Buy rating, and his $36 price target implies high one-year upside potential of 168%. (To view Divan’s track record, click here.)
Guggenheim’s view on this stock is not an outlier, as evidenced by its unanimous Strong Buy consensus rating, based on five positive analyst ratings. The shares are trading at $13.45, and their average price target of $33.25 points to a 147% gain over 12 months. (See Aerovate’s stock forecast.)
Vir Biotechnology (VIR)
Next up is Vir Biotechnology, an immunology-focused pharmaceutical researcher working on ways to treat and prevent infectious diseases. The company vision is based on ‘a world without infectious diseases’ and the development program is broad-based and focuses on viral infections such as hepatitis, influenza and HIV. Vir has several hepatitis B candidates in the clinic, at the Phase 2 level, and is preparing to initiate a Phase 1 trial for an HIV vaccine candidate.
The biggest news about Vir, however, is about failure. This is not unusual for a biotech researcher; many more pipeline programs fail than succeed and are approved. In this case, Vir’s drug candidate VIR-2482, a potential vaccine against influenza, did not meet the objectives of the Phase 2 clinical trial. The trial, called PENINSULA, tested the drug as a preventative against influenza, and in a July 20 data release, the company announced that the drug had not met its primary or secondary efficacy endpoints. Shares in VIR fell 45% on the news. Year-to-date, the stock is down 62%.
Although the -2482 program has suffered a serious setback, the company’s hepatitis and HIV programs remain on track. VIR has two hepatitis B drug candidates undergoing multiple ongoing clinical trials. The goal is to develop a functional cure for chronic hepatitis B. Data readouts from these studies are expected in Q4 23 and first half of 24.
In the HIV program, Vir’s Phase 1 study of VIR-1388, a novel T-cell vaccine intended as a preventative against HIV, will begin dosing in this third quarter of 2023.
These emerging catalysts are behind Leerink Partners’ Roanna Ruiz’s bullish view on shares. The analyst writes: “With multiple programs in the clinic (HBV, HDV and HIV), Vir could become a leading biopharmaceutical infectious disease company with a management team with expertise in infectious disease, drug development and commercialization; furthermore, their cash position of ~$1.9 billion provides sufficient support for Vir’s many clinical development efforts without the need for near-term capital increases.”
Ruiz then rates this stock as Outperform (a Buy), with a $24 price target that implies a robust upside of 149% over the next twelve months. (To view Ruiz’s track record, click here.)
This company has collected 8 recent analyst ratings, including 6 for Buy versus 2 Holds, supporting the Strong Buy analyst consensus rating. The average price target of $36 suggests a strong upside of 274% over the next year, from the current trading price of $9.63. (See Vir Biotechnology’s stock forecast.)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is for informational purposes only. It is very important to do your own analysis before making an investment.
