It’s safe to say that stock investors are ending 2024 in a fairly optimistic mood. Markets posted significant gains, with the S&P 500 up nearly 27% this year.
The support for the current bullish trend is clear. The prospect of interest rate cuts, coupled with stronger-than-expected corporate earnings, is boosting market confidence. Adding to the optimistic outlook, last month’s election secured former President Trump a non-consecutive second term, fueling hopes for pro-business, pro-growth economic policies.
Looking ahead, Oppenheimer’s chief investment strategist John Stoltzfus thinks this rally is far from over.
“Bullish-minded traders and investors (of which we are a part) point to fundamental factors that indicate the current resilience of the economy and stock market appears poised to continue into next year… Based on a number of factors, including the current monetary policy in the United States, resilience in economic growth, business activity, consumer and job creation reflected in recent years and this year, we are initiating a price target for the S&P 500 by the end 2025 of 7,100,” Stoltzfus said. claimed.
With Stoltzfus’ objective in mind, we turned our attention to two stocks that earned a round of applause from Oppenheimer. According to the company’s analysts, both are on track for huge gains, including earnings that could rise nearly 580%.
After running the tickers through TipRanks’ database, it’s clear the rest of the Street agrees, with each receiving a ‘Strong Buy’ consensus rating. Let’s take a closer look at what is driving this widespread enthusiasm.
Sagimet Biosciences (SGMT)
We’ll start with Sagimet Biosciences, the first stock to earn Oppenheimer’s support – and for good reason. This biotech company is pioneering a new approach to drug development through its inhibitors of fatty acid synthase (FASN), a new class of drugs with enormous clinical potential.
Several diseases are linked to the overproduction of the fatty acid palmitate, and Sagimet’s clinical pipeline aims to target the dysfunctional metabolic and fibrotic pathways associated with these conditions. Chief among these is metabolic dysfunction-associated steatohepatitis (MASH), a serious liver disease. As an important regulator of lipid synthesis, FASN represents a potential therapeutic target for the treatment of this liver disease.
The FASN pathway is involved in several other conditions, ranging from relatively common problems such as acne to more serious diseases such as cancer. However, the MASH pilot remains the company’s most advanced program.
In this regard, Sagimet reached a milestone earlier this year by completing the Phase 2b FASCINATE-2 study. This study evaluated denifanstat, the company’s flagship product, as a treatment for F2/F3 MASH – a stage in which patients experience moderate to advanced liver fibrosis. Without safety or tolerability issues, denifanstat demonstrated a strong efficacy profile.
Sagimet is preparing to launch a Phase 3 trial for denifanstat by the end of the year and plans to expand the study to patients with F4 MASH. The need for treatment in this area is enormous: approximately 22 million adults in the US are affected by MASH and the available options are limited.
In addition to MASH, denifanstat is also being tested in China for the treatment of acne in collaboration with Ascletis. Acne presents another important opportunity for Sagimet, as the FASN pathway plays a key role in sebum production, which contributes to the condition. The company expects to release top results from a Phase 3 study in the second half of 2025.
Finally, Sagimet is investigating denifanstat as a treatment for the aggressive brain cancer glioblastoma, specifically recurrent glioblastoma multiforme (rGBM), in combination with bevacizumab. Phase 2 data from this combination therapy met the primary endpoint of progression-free survival (PFS), with a six-month PFS of 31.4% compared to 16% for bevacizumab monotherapy. The Phase 3 study, like the acne study, is being conducted in China with Ascletis, with topline data expected in the first half of 2025.
Given denifanstat’s potential and SGMT’s stock price at $4.39, Oppenheimer analyst Jay Olson believes now is the time to act.
“SGMT’s current market cap is ~$141 million, which seems undervalued to us based on the promising MASH program with validation by major pharmaceutical companies, for example NVO and LLY’s clinical efforts to expand incretin approval beyond obesity to MASH and Boehringer Ingelheim’s recent $2 billion partnership with Suzhou Ribo Life Science Co. and Ribocure Pharmaceuticals to develop a siRNA-based MASH therapeutic… Our SOTP analysis values denifanstat at $18/share in F2-F3 MASH, $2/share in F4 MASH, $1/share in relapsed glioblastoma, $5/share in moderate to severe acne, and estimated cash at YE24 at $4/share,” Olson said.
“While we see potential for denifanstat to gain market share through its differentiated efficacy and safety as a monotherapy, its potential as a combination therapy strengthens our conviction around its commercial success, if approved,” the analyst added.
Therefore, Olson rates SGMT an Outperform (i.e. Buy), along with a $30 price target. If the target is achieved, a gain of as much as 583% could be in store in twelve months. (To view Olson’s track record, click here)
Now turning to the rest of the Street, there have been five buys and no holds or sells published in the last three months. That’s why SGMT has a Strong Buy consensus rating. With an average price target of $25.33, the upside potential is approximately 477%. (To see SGMT stock forecast)
Y-mAbs Therapies (YMAB)
The next stock we’ll look at is Y-mAbs, an oncology-focused biotech company with one leg in the clinical trial phase and one leg in the commercialization phase. The Y-mAbs-approved drug, DANYELZA, is a monoclonal antibody used in combination with granulocyte-macrophage colony-stimulating factor (GM-CSF) to treat pediatric patients 1 year of age and older, as well as adults with relapsed or refractory high-risk on neuroblastoma in the bone or bone marrow. It received FDA approval for use in the US in November 2020.
As DANYELZA has contributed to Y-mAbs’ revenue stream and expands its geographic reach, the company’s SADA platform technology has generated even more excitement. This innovative approach uses a pre-targeted payload delivery system, where antibody constructs form tetramers that precisely bind to tumor targets. Y-mAbs sees this technology as a transformative tool in oncology, with the potential to target a wide range of cancer tumors with unprecedented precision.
Y-mAbs is currently conducting early-stage human clinical trials of GD2-SADA, one of the clinical products associated with this technology. The Phase 1 study focuses on GD2-expressing solid tumors such as SCLC, melanoma and sarcomas, with administration of the drug scheduled at various intervals before standard treatment with 177Lu-DOTA. The trial is divided into three parts and is expected to deliver Part A results early next year. This first phase aims to identify the optimal protein dosage and establish the ideal timing between the administration of the SADA protein and the subsequent loading.
Another leading clinical candidate from the SADA platform is CD38-SADA, which, as the name suggests, targets CD38 – a protein found on the surface of certain blood cancer cells. Y-mAbs is advancing a Phase 1 dose-escalation study aimed at evaluating the safety, tolerability, and optimal dosing of CD38-SADA PRIT, a two-step therapy with CD38-SADA and Lu177-DOTA, in adults with relapsed or refractory non- Hodgkin lymphoma.
Among the believers in Y-mAbs’ potential is Oppenheimer analyst Jeff Jones, who writes: “Our enthusiasm is focused on YMAB’s clinical-stage SADA platform, as the most advanced pre-targeting platform currently in development for the delivery of targeted radiopharmaceutical therapies (TRT). . The SADA platform has the potential to address a critical challenge faced by TRTs, namely radiation exposure outside the target area. YMAB’s selection of targets for SADA will be key to their success, with details on future plans expected in early 2025. In addition to having two SADA-based candidates in the clinic by early 2025, YMAB generates ~$90 million annually from DANYELZA sales in high-risk neuroblastoma (HRNB) which we see primarily as a way to leverage SADA R&D investments to compensate.”
Supporting his enthusiasm, Jones rates YMAB an Outperform (i.e. Buy), and his $23 price target points to one-year upside potential approaching 144%. (To view Jones’ track record, click here)
Overall, the stock has received five analyst ratings – and these are broken down into four buys and one hold, which equates to a strong buy consensus rating. At $31.20, the average price target is more aggressive than Oppenheimer’s and implies ~231% upside potential. (To see YMAB Stock Prediction)
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.
