In a bearish market, there are fewer scenarios that are more attractive to investors than those that outline bearish sentiment about to turn positive. And according to Ari Wald, head of technical analysis at Oppenheimer, we are currently on the cusp of such a reversal.
“Our analysis shows that the weakness in September marks the latest low in the bear cycle and an upside opportunity for long-term investors,” Wald recently explained. “In the postwar era, most bear cycles have been long and shallow or short and sharp. We have counted only four long and deep downturns (1968, 1973, 2000 and 2007) and believe that market conditions are stronger now than they were during those extreme periods.”
With that in mind, here are two stocks that Wald’s fellow analysts at the investment firm have noted as attractive right now. With the help of TipRanks platform, we can gauge the rest of Wall Street’s sentiment toward these names. Here are the details.
Let’s first look at software specialist HashiCorp – a cloud automation software provider to be exact.
HashiCorp provides open source tools that integrate with and extend services provided by public cloud service providers such as Amazon and Microsoft. Terraform, which configures infrastructure, and Vault, which manages password management, are two examples of the company’s nine separate products that serve different segments of the cloud infrastructure industry. The products are right on trend as, given the ongoing digital transformation, enterprises are now inclined to use more than one cloud provider.
HashiCorp is relatively new to the public markets, having held an IPO in December 2021, when the company boasted a market capitalization of about $14 billion. But as is the case with so many, the stock failed to buck the bearish market trends and has fallen 63% since its debut.
That didn’t stop the company from delivering strong quarterly results, as was the case with its recently released second quarter fiscal 2023 (July quarter) report.
Revenue came in at $113.9 million, $11.56 million above Wall Street expectations and up 52% year-over-year. The performance was boosted by customer sales growth of more than $100,000 in ARR (annual recurring revenue) and a record 134% year-over-year growth in NDRR (net dollar retention rate). Non-GAAP EPS of -$0.17 narrowly beat the Street estimate of -$0.31. Adding an extra layer of gloss, for FQ3 the company currently expects revenue between $110 – $112 million compared to consensus expectations of $106.48 million.
These are the results that excite Oppenheimer’s Itai Kidron, who applauds the display in the face of “macro headwinds.”
The 5-star analyst wrote: “HashiCorp continues to demonstrate its growing importance to large enterprises as they move to the cloud. We believe management’s guidance includes a measured view of macroeconomic realities and are encouraged by the new focus on driving operating leverage. We remain optimistic and believe that HashiCorp is at the beginning of exploring a tremendous growth opportunity.”
To that end, along with an Outperform (i.e., Buy) rating, Kidron’s $50 price target suggests the stock has room for a 66% upside over the next year. (To view Kidron’s record, Press here)
Looking at the consensus breakdown, out of 9 recorded reviews, 4 currently favor a sell on this one, but with the addition of 5 positive reviews, the stock claims a moderate consensus rating of buy. Most believe the stock is undervalued at the current trading price; hitting an average target of $44.67, the stock will trade hands at a 48% premium a year from now. (Check out the HashCorp stock forecast at TipRanks)
IDEAYA Biosciences (IDYA)
Let us now turn to something quite different about Oppenheimer’s second choice. IDEAYA Biosciences is a precision medicine company focused on synthetic lethality. It is focused on the discovery and development of targeted oncology drugs for patient populations identified using molecular diagnostics. To select the patient populations most likely to benefit from the company’s drugs, its method combines skills to identify and validate translational biomarkers with small molecule drug discovery.
IDEAYA has several drugs in preclinical development and two that have already advanced into clinical trials.
These include darovasertib, a protein kinase C (PKC) inhibitor designed to treat genetically defined cancers displaying GNAQ or GNA11 gene mutations. This drug is in a phase 2 study targeting metastatic uveal melanoma (MUM) in combination with Crizotinib, a Pfizer-developed cMET inhibitor. Data from the trial are expected soon, and if the readings are positive, a registration trial at MUM could potentially follow.
The other asset advancement is the IDE397. This therapy is indicated for patients with methylthioadenosine phosphorylase (MTAP) deletion, a group of patients representing about 15% of all solid tumors. This investigational, potentially best-in-class, small molecule MAT2A inhibitor is being evaluated in an ongoing phase 1/2 clinical trial.
Oppenheimer’s Matthew Bigler’s thesis on IDYA focuses on the latter’s potential, but the analyst is increasingly confident that the former can also deliver, although he admits that darovasertib is a bit of a “dark horse” after unfavorable monotherapy results. Bigler, however, thinks the crizotinib combination may surprise doubters.
“We have spoken with management ahead of updates from the combination trial of the PKC inhibitor darovasertib, which is expected in September,” the analyst said. “We are warming to the program, aided by a better assessment of the market opportunity in uveal melanoma and the strength of the initial data set from December… We believe that strong data, along with concrete regulatory guidance, can help win over remaining skeptics — and we are increasingly optimistic about the outlook.”
Accordingly, Biegler rates IDYA as Outperform (Buy), supported by a price target of $22. The implications for investors? Up from a full 134%. (To watch Biegler’s record, Press here)
Most of Bigler’s colleagues agree. While one analyst remains on the sidelines, the remaining 4 reviews are positive, making the consensus view here a Strong Buy. The forecast calls for one-year gains of 94%, given the average target price of $18.20. (See the IDEAYA Biosciences 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 analystc. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.