Billionaire Steve Cohen is making big profits on these 2 "strong buy" stocks

2022 has undoubtedly been a difficult year for investors. Even taking recent gains into account, all major indices are still down for the year and the backdrop of economic uncertainty still looms ominously.

Such an environment makes it difficult to find stocks that are ready to load, but one way to separate the wheat from the chaff is to follow in the footsteps of legendary stock pickers.

And few are as well versed in the investment game as billionaire Steve Cohen. Known for its high-risk, high-reward trading style, the hedge fund manager’s Point72 firm boasts $25 billion in assets under management, with Cohen’s net worth estimated at around $16 billion.

So when Cohen makes some moves, it’s only natural that investors take notice. Recently, Cohen has been loading up on two names, and we dug into them TipRanks database to get information about these tickers. It turns out Cohen isn’t the only one who thinks these stocks are worth it. According to the analyst consensus, both are rated as strong buys. So let’s look at what makes these names attractive investment choices right now.

Exact Sciences (EXAS)

Cohen’s first pick we’re looking at is Exact Sciences, a molecular diagnostics specialist focused on cancer prevention, whose tools help detect cancers while they’re still at an early stage.

The company’s initial product was the Cologuard colon cancer test, launched in 2014 as the first fecal DNA test for colorectal cancer. Originally focused on early detection and prevention of colorectal cancer, Exact Sciences has since expanded its product line to include additional oncology screening and precision testing for many forms of cancer.

The company’s latest quarterly report was a win-and-raise affair. Exact delivered revenue of $523.07 million, representing a 15% year-over-year increase, while beating the consensus estimate by $19.95 million. Likewise, on the bottom line, EPS came in at -$0.84, beating the Street’s estimate of -$1.07. And for perspective, due to the steady pace of the quarter, the company raised its full-year 2022 revenue guidance from $1.980-2.022 billion to $2.025-2.042 billion.

It’s no wonder, then, that an investor like Steve Cohen would be interested in a company like Exact Sciences. In the third quarter, Cohen’s Point72 made a significant purchase of EXAS stock, totaling 2.43 million shares, which at the current stock price is now worth over $104 million.

Canaccord Analyst Kyle Mixon also sees plenty of reason for an optimistic outlook here. He wrote: “Regardless of the path the colorectal cancer screening market takes over the next few years, we remain optimistic that Exact Cologuard’s business should be a continued solid growth asset over time. We are also very enthusiastic about Exact’s long-term growth potential, given its many assets, progress towards profitability (without pursuing dilution options) and performance. We believe the company is on track to deliver on its core long-term growth strategy.”

Accordingly, Mikson rates EXAS shares a Buy, supported by a $70 price target. There is a lot of upside – 63% to be exact – if the goal is met in the next 12 months. (To watch Mikson’s record, Press here)

In total, 12 analysts have offered their views on Exact and they are divided into 9 Buys and 3 Holds, giving the stock a strong consensus rating of Buy. At 57.67, the average target suggests the stock will deliver a return of ~35% in the coming months. (Check out the EXAS stock forecast at TipRanks)

Horizon Therapeutics (HZNP)

The next name endorsed by Cohen is Horizon Therapeutics, a biopharmaceutical company focused on bringing to market drugs for rare, autoimmune and severe inflammatory diseases. Horizon has a deep and diverse drug portfolio that includes thyroid eye disease (TED) therapy Tepezza, gout drug Krystexxa and urea cycle disorder treatment Ravicti, among others.

They all contribute to the increase in revenue, with Tepezza leading the way. Although third-quarter sales of the drug fell 20% year-on-year to $491 million, the figure represented a sequential increase of 2% and allayed fears of a larger pullback. In fact, while total revenue was down 10% from the same period a year ago to $925.4 million, the figure beat the Street’s estimate of $37.76 million. There was also a strike on the bottom line, with an adj. EPS of $1.25 came in well ahead of Wall Street’s $1.01 estimate.

Even better, the company also presented its outlook; full-year sales guidance was raised from $3.59 billion to $3.61 billion (consensus was $3.56 billion).

Beyond its product portfolio, the company has a prominent process that got a real boost from last year’s acquisition of Viela Bio. The $3 billion deal helped the company not only acquire Viela Uplizna’s lead candidate, which is approved for the treatment of neuromyelitis optica spectrum disorder (“NMOSD”) in the US, but also boosted the pipeline with three assets named for the treatment of autoimmune diseases such as systemic lupus erythematosus (SLE), sjögren’s syndrome and rheumatoid arthritis.

Cohen clearly thinks the company is making all the right moves. In Q3, he opened a new position and bought 2,094,400 shares. They are now worth over $157 million.

Looking ahead, Wells Fargo analyst Derek Archilla points out that there is plenty in store next year: “We think 2023 will be a big year for the HZNP pipeline, which we think is undervalued and should generate upside for the stock. There are a number of clinical catalysts that we believe could help HZNP stock re-rate and lead investors to determine more non-equity bottom line value at these levels.”

Elaborating on the above, Archilla added: “Tepezza’s low CAS/chronic TED trial will report in 2Q23, which is important to expand its use to a much larger set of TED pts than high CAS/active. Beyond that, we are most interested in daxdilimab’s SLE Ph2 trial in 2H23, which is de-risked by BIIB059, and its alopecia areata Ph2a trial in 2023. We think this could be a “pipeline in a product” given there are many autoimmune conditions in which type I IFN is implicated. Also, data from dazodalibep in Sjogren’s from several populations will be reported in 1H23.

Considering all of the above, Archila has high hopes. Along with an overweight (i.e. Buy) rating, he set a $118 price target on the stock. This target puts the upside potential at 57%. (To watch Archila’s record, Press here)

In general, most of Archilla’s colleagues support his bullish position. Based on 9 buys versus 2 holds, the analyst consensus rates the stock as a strong buy. The forecast calls for one-year gains of ~30% given the average target is $97.45. (Check out the HZNP stock forecast at TipRanks)

To find good stock trading ideas at attractive valuations, visit TipRanks’ The best stocks to buya recently launched tool that brings together all of TipRanks equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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