Amid the noise of the blue chip giants, penny stocks quietly beckon investors with the lure of undiscovered potential. For those willing to dive deep into the market’s undercurrents, these low-priced stocks promise a wealth of opportunity.
The “pennies” are stocks priced at less than $5 per share, and simple math tells us that even a small gain in absolute value will quickly turn into a high return.
What’s the downside? A small decline in the share price can cause large percentage losses. Due to the nature of these huge moves, penny stocks are notoriously volatile.
Piper Sandler analysts are willing to take this risk – and specifically recommend two cents for a huge profit. According to the analysts, these two stocks could rise at least 300% in the coming year.
According to TipRanks database, both are also being cheered by the rest of the Street, as they boast a “Strong Buy” consensus rating. Let’s take a closer look.
Zura Bio (ZURA)
We’ll start with a clinical-stage biopharmaceutical company, Zura Bio. This company focuses on creating new medicines in the field of immunology, especially in the treatment of autoimmune and inflammatory conditions. Zura takes a two-pronged approach to meeting patients’ therapeutic needs and delivering tangible improvements to their well-being. To this end, the company has three assets in its development pipeline, all of which have completed Phase 1 clinical trials and are considered ready to advance to Phase 2.
The company’s key asset is tibulizumab, a dual antagonist against IL-17 and against BAFF that is potentially a first-in-class solution for the treatment of both hidradenitis suppurativa (HS) and systemic sclerosis (SSc). The first of these conditions is an inflammatory follicular skin disease and is estimated to affect between 300,000 and 400,000 patients in the US. The second condition is an autoimmune disease that causes tissue inflammation and fibrosis and is potentially fatal. Tibulizumab showed promising results in early testing and is currently scheduled for a Phase 2 trial for the treatment of SSc in Q4 2024, as well as a Phase 2 trial for HS in Q2 2025.
The company’s second asset is ZB-168, described as a “fully human IgG1 monoclonal antibody directed against the IL-7Rα,” a pathway that plays a key role in the development, function and homeostasis of the immune system’s T cells. Zura believes ZB-168 shows promise as a therapeutic option for autoimmune diseases involving the IL-7 or TSLP signaling pathways.
Finally, Zura is working with torudokimab, its third drug candidate. This drug is another monoclonal antibody, described as fully human and with high affinity. The action of torudokimab is described by the company as neutralizing IL-33, thereby preventing ST2-dependent and ST2-independent (e.g. RAGE) inflammation.
Based on the potential of Zura’s solid assets and its $3.43 share price, Piper Sandler analyst Yasmeed Rahimi thinks now is the time to get in.
“Zura Bio is a clinical-stage biotech company that is carefully developing a pipeline of best-in-class antibodies acting via dual pathways to treat diseases in inflammation and immunology with high unmet need… ZURA has 3 differentiated assets in Ph2 development Four indications, noting that all of these compounds have been in-licensed from leading large pharmaceutical companies such as Eli Lily and Pfizer, significantly de-risking these assets and positioning ZURA for rapid commercialization in our view,” Rahimi noted.
“Given the multitude of upcoming catalysts with 9 in IL-17/BAFF, 14 in IL-7 and TSLP, and 5 in IL-33, we believe these catalysts will deliver significant market share gains as they validate the potential for pipeline expansion opportunities, open the door for a ‘pipeline-in-a-product’ and unlock further sequential value for each of ZURA’s assets,” Rahimi added.
Therefore, Rahimi rates ZURA stock as Overweight (i.e. Buy), and her $26 price target implies a robust one-year upside potential of 659%. (To view Rahimi’s track record, click here)
Do other analysts agree? They are. There have been 4 purchases and no hold or sell transactions in the last three months. So the message is clear: ZURA is a strong buy. Given the average price target of $21.33, shares could rise ~523% from current levels. (To see ZURA Stock Forecast)
Monte Rosa Therapeutica (GLUE)
The second penny stock on the list of Piper Sandler picks is Monte Rosa, another biopharmaceutical company. Monte Rosa works with protein breakdown to develop new treatment methods for various disease conditions. The company came to this approach by realizing that many human disease states are caused or exacerbated by abnormal intracellular protein function, particularly irregularities in protein breakdown, the process by which old, non-functioning or irregular proteins are broken down and removed from healthy cells and tissues.
Monte Rosa uses molecular adhesive degraders (MGDs) to induce protein-protein interactions and enable the elimination of targeted proteins. The company believes this approach can open up new treatment options by eliminating therapeutically relevant proteins that have resisted treatment by the current armamentarium of small molecule drugs on the market.
For now, Monte Rosa is working with MGDs that promote the degradation of targeted proteins by facilitating interactions between the targeted proteins and a ubiquitin ligase. The MGDs bind to the ubiquitin ligases and create new surfaces on the targeted proteins. These surfaces are complementary to the therapeutically relevant targets and enable the promotion of protein degradation. The company is using its QuEEN platform, a proprietary technology, to rationally design, develop and deploy the MGDs.
The lead drug candidate, created on the QuEEN platform, is MRT-2359. This MGD is ‘potent, selective and orally bioavailable’ and is designed to promote targeted degradation of the GSPT1 protein, by inducing interactions between cereblon (CRBN), a component of the E3 ubiquitin ligase, and the translation termination factor GSPT1. This drug candidate is progressing in an ongoing Phase 1/2 clinical trial and data from the Phase 1 segment is expected to be released in the second half of 2024.
This company’s new approach and early success with the QuEEN platform have caught the attention of Piper Sandler analyst Edward Tenthoff.
“While computational approaches are common in protein degradation, QuEEN is advanced and comprehensive, allowing the company to rationally design MGDs… Importantly, QuEEN now rapidly delivers MGDs against therapeutically relevant targets. We expect Monte Rosa to create shareholder value by reporting clinical data on MRT-2359, and by advancing and expanding its early stage MGD pipeline, and potentially signing additional partnerships… We see the opportunity for Monte Rosa to expand the to close the valuation gap with other TPD projects. and Kymera…’
Tenthoff thinks GLUE shares deserve an Overweight (i.e. Buy) rating, and his $16 price target on the stock suggests a 12-month upside of 315% is in the cards. (Click here to watch Tenthoff’s track record)
Do other analysts agree? They do. Only Buy ratings, 5, have been issued in the past three months, so the consensus rating is Strong Buy. The stock is trading at $3.86, and their $16.25 average price target suggests there’s room for a 321% upside from that level. (See GLUE Stock Forecast)
For 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.
