We are already well into the fourth quarter and investors are positioning their portfolios for the year ahead. As always, identifying stocks poised to deliver solid returns is critical, and Bank of America has highlighted strong picks for those seeking high growth opportunities.
BofA’s analysts don’t limit their focus to just one part of the market; they look across sectors at a diverse group of stocks – and they look ‘under the hood’ to find stocks that are ready to pounce.
With that in mind, we used the TipRanks database to rate two of Bank of America’s latest stock picks, both of which offer strong upside potential – including one with a potential gain of almost 390%.
In fact, the banking giant isn’t the only one backing these names; both stocks are rated as ‘Strong Buys’ by the broader analyst consensus. Let’s take a closer look and find out what the optimism is about.
Werewolf therapies (howling)
We start in the world of biotherapeutics, where Werewolf Therapeutics is developing new immunotherapy drugs specifically designed to reduce the common and serious side effects often associated with cancer treatment. The company has created a proprietary development platform, known as PREDATOR, to develop conditionally activated molecules that stimulate both the adaptive and innate functions of the immune system. Using this approach, Werewolf has successfully advanced two drug candidates into clinical trials.
Both products are INDUKINE molecules, a patented development, and are designed to selectively activate in tumor tissues, while remaining inactive in peripheral tissues, a function intended to reduce the occurrence of unwanted off-target effects and at the same time enhance the anti-tumor maximize immune response. Werewolf’s goal is to develop cancer drugs that are better tolerated than existing treatments.
Werewolf’s lead drug candidate, WTX-124, is being developed to treat solid tumors and is being investigated as a monotherapy and in combination with Keytruda. The company is enrolling patients in an open-label, multicenter Phase 1 study – a first-in-human trial of the drug. At the ASCO annual meeting in June 2024, the company shared new interim results from the monotherapy dose-escalation arm, along with early data from the combination arm. The latest data highlight the clinical activity of WTX-124 and its overall tolerability in patients. Dose escalation in the combination study section is ongoing, and updated data are expected by the end of the year.
The company’s second candidate, WTX-330, targets the treatment of advanced or metastatic solid tumors as a monotherapy. Early data from the phase 1 trial, also presented at ASCO, showed promising results in patients with advanced solid tumors or non-Hodgkin lymphoma. Werewolf plans to release further updates later this quarter.
Despite a 47% decline in the share price this year, could this present an excellent buying opportunity? Bank of America five-star analyst Jason Zemansky thinks so.
“Despite an arguably positive conference, Werewolf Therapeutics shares have been under pressure since ASCO. In our view, this has less to do with concerns about the WTX-124 data, which have arguably added support to an encouraging, albeit early, clinical profile. Rather, we believe that the decline has been driven more by competitive fears related to the size and duration of responses to ‘124’. We acknowledge the concerns, but believe they are exaggerated; Beyond the caveats of comparing (especially) early-stage efficacy data, we think investors are overlooking the more critical safety updates that not only differentiate Werewolf’s IL-2 assets, but also the platform further validate it – the key value driver of the story. in our opinion,” the analyst opined.
Looking ahead, Zemansky sees strong potential for investors. He states: “Ahead of a catalyst-rich 12 months – several of which could trigger a rerating – we see compelling near-term upside and opportunities for weakness.”
Taken together, these comments support Zemansky’s Buy rating on HOWL, while his $10 price target indicates an impressive ~390% upside potential over the next twelve months. (To view Zemansky’s track record, click here)
Overall, there are four recent analyst reviews recorded for Werewolf, all of which are positive, resulting in a unanimous Strong Buy consensus rating. Shares are priced at $2.05, with an average price target of $12.50, even higher than Bank of America’s call, suggesting a potential gain of ~510% over the next twelve months. (To see HOWL stock forecast)
Ibotta, Inc. (IBTA)
From biotechnology we move to consumer technology with a look at Ibotta, a shopping rewards company. Based in Denver, Colorado, Ibotta provides and operates a direct-to-consumer app that allows shoppers to claim cash back rewards on a wide range of online and in-person purchases. The app allows users to claim rewards from virtually anywhere. A long list of retailers, mostly grocers, are participating, including big names like Publix, Dollar General, Costco, Jewel-Osco, Kroger, Meijer, Walmart and Whole Foods. In addition to the supermarket sector, chains such as Home Depot, Lowes and Kohl’s also participate, as does Amazon.
Ibotta was founded in 2011 and earlier this year, after thirteen years in business, the company entered the public market through an initial public offering. The public offering saw 6.56 million shares floated by both the company and various private shareholders, with an initial price of $88 per share. This price was well above the estimated IPO range of $76 to $84. In total, the event raised $577 million. Ibotta sold 2.5 million shares directly, generating $220 million in proceeds.
Since its IPO, Ibotta’s stock has fallen nearly 32%. In response, the company initiated a $100 million share buyback program in August to support its share price.
On the financial side, Ibotta has released two sets of earnings results since its IPO. The most recent, released in August and covering Q2 24, showed revenue of $87.9 million, up ~14% year over year and exceeded forecast by $2.15 million. Ultimately, the company’s non-GAAP earnings per share of 68 cents per share was 5 cents per share below expectations.
In his coverage of this stock for Bank of America, analyst Curtis Nagle sees this stock as a potential growth opportunity for investors. Discussing the company’s broad footprint in its niche, he notes, “As CPG brands focus on ways to efficiently deliver value to consumers and increase volumes, we see Ibotta as one of the key beneficiaries. Ibotta works with ~2,400 brands and is the only digital promotion organization. which provides full bottom-of-funnel attribution (links purchase to person, place, time, etc.) and only gets paid when a promotion leads to a purchase. We see Ibotta as a very attractive alternative to other forms of marketing and promotion where ROAS is much more difficult to measure.”
Nagle then rates IBTA a Buy and supplements that with a $110 price target, suggesting ~64% upside over one year. (To view Nagle’s track record, click here)
Overall, this newly listed stock has earned a Strong Buy analyst consensus rating by receiving six positive ratings from The Street. The stock is priced at $67.19 and the average price target of $101.17 implies a one-year upside potential of ~51%. (To see IBTA stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
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.
