Morgan Stanley bets on these 3 stocks; Sees over 40% up
The epic stock market rally just needed a little breath? In the last few weeks, the shares have undergone their first significant correction since the beginning of the bullish market in March. Now the question that swirls around the street is whether the rally will return again or further down the road? According to Mike Wilson, Morgan Stanley̵
7;s chief strategic shareholder in the United States, uncertainty about the presidential election and the stagnation of the next stimulus package could lead to a decline in September and October. “In terms of the adjustment, there is still a shortcoming, as the markets absorb the risk of a congressional congress in the next fiscal deal. “Although we think that something will be done in the end, it will probably take a few more weeks to overcome it through the goal line,” he said. However, Wilson argues that recent volatility in no way signals the end of the current bullish market. “We believe that this correction is exactly that, a correction in a new bullish market. It is normal for the markets to recede after such an incredible run as we have been experiencing since March. In addition, when the new bull market coincides with a new economic cycle, the bull market usually works for years, not months, “explained the strategist. Taking Wilson’s prospects to heart, our focus shifted to three stocks that raised the thumbs of Morgan Stanley As the company’s analysts see more than 50% increase potential for each, we used the TipRanks database to get the full spoon.Akero Therapeutics (AKRO) With its innovative drugs designed to restore metabolic balance and stop NASH progression , a severe form of non-alcoholic fatty liver disease, Akero Therapeutics wants to meet the unmet medical needs of patients around the world.Based on the strength of its leading candidate, Morgan Stanley is gaining ground.Presenting the company, 5-star analyst Matthew Harrison says customers that AKRO’s treatment for NASH, efruxifermin (EFX), has a “best-in-class profile.” EFX is the company’s core asset and is designed to mimic the biological activity of fibroblast growth factor 21 (FGF21), which regulates multiple metabolic pathways and cellular processes, to reduce liver fat and inflammation, reverse fibrosis, increase insulin sensitivity, and improve lipoproteins. for Harrison, NASH is a complex disease, with patients typically having multiple comorbidities such as obesity, type 2 diabetes, elevated triglycerides, elevated LDL cholesterol, and low HDL cholesterol. “The promising therapeutic solution would not only treat the many components of NASH, but would also have an acceptable side effect profile, given the potential comorbidities,” the analyst explained. Here comes the AKRO therapy. “In June, Akero presented best-in-class data from its Phase 2a study. These data show that EFX improves the two hepatic histological endpoints recommended by the FDA, along with leading to weight loss, improving cardiovascular health (increasing good HDL cholesterol, lowering triglycerides, not raising bad LDL cholesterol) and improving factors related to controlling blood sugar levels. This benefit / risk profile beats the competition, “Harrison said. Looking at the indication as a whole, Harrison sees NASH as a very big possibility, as about 20 million people in the United States suffer from the condition. However, the analyst acknowledges that there are trade barriers. one is the fact that “NASH is not currently diagnosed in all, but in a very small percentage of the predominant pool, as the diagnosis currently requires an invasive liver biopsy.” Therefore, in addition to demonstrating a positive benefit / risk profile, AKRO will have to find patients and provide support to the payer if the applicant receives FDA approval, according to Harrison. This said that Harrison believes that AKRO is ready for this task. “We believe that given the clean safety profile of EFX and the wide-ranging effects, Akero is likely to largely overcome these trade barriers, “he commented. Harrison added:” It is important that because Akero’s treatment is injectable, we only we estimate that the drug will penetrate the population of the sickest patients, who currently have at least 400,000 patients diagnosed and seeking treatment in the United States. ” To that end, it sets a 60% chance of success and estimates that peak sales for the U.S. and the EU, which are not adjusted, will reach $ 4.5 billion. Based on all of the above, Harrison estimates AKRO is overweight ( ie Buy) along with a price tag of $ 70. If his thesis is played out, the cards could have a potential twelve-month gain of 93%. (To watch Harrison’s recording, click here) Do other analysts agree? They are. Only Buy ratings, actually 6, have been issued in the last three months. The message is therefore clear: AKRO is a strong purchase. Given the target of an average price of $ 58.50, shares could rise 61% next year. (See AKRO stock analysis for TipRanks) TransDigm Group (TDG) Then we have TransDigm Group, which is one of the best manufacturers, designers and suppliers of highly designed aerospace components, systems and subsystems. Its products are used in almost all commercial and military aircraft in operation today. Given its ability to withstand the storm COVID-19, Morgan Stanley sees a bright future ahead. Morgan Stanley analyst Christine Liwag said: “We see TransDigm as the most secure space business model in space.” But that doesn’t mean the company hasn’t faced serious challenges. Over the past few years, management has had to struggle with how to determine the price of its defense business, the sustainability of its pricing strategy in space, the sustainability of its balanced balance, and its ability to cope with declines. However, Liwag remains optimistic in the future. “TDG has overcome the brief thesis after a short thesis in the last few years, and we do not expect these concerns to recur,” she said. According to Liwag, “TDG’s ability to hold on to margins during a global pandemic” transmits its operational strength. To this end, its estimate of EBITDA margins is well above the rest of the street. The analyst also points out that the company reduced its public and administrative expenses by $ 89 million on an annual basis in the third quarter of 2020. “We anticipate that the company will keep at least half of these savings and the rest will return to below the form of variable selling costs, “she said. Livag added:” We are positive about TransDigm, especially as a recovery in global air traffic would be beneficial for TransDigm’s main producer of profits, the secondary market. In addition, we see positively that TDG has the means to acquire weaker players. “As early as April, management raised $ 1.5 billion in additional debt to reduce liquidity risks and provide an additional cushion. “The high debt burden is part of the management’s strategy to provide private capital as a return for its shareholders. Historically, the company has used debt to acquire businesses with similar attributes in TDG’s portfolio of 90% own products and 75% single deliveries. “If passenger air traffic continues to normalize, we would expect TDG to use its additional capital to acquire difficult businesses that are in line with its strategy,” Livag said. All this prompted Livag to leave his bullish conversation and the price of 772 dollars for a price unchanged. This goal expresses her confidence in TDG’s ability to climb 48% higher next year. (To view Liwag’s record, click here) In view of the consensus breakdown, 7 purchases and 5 arrests have been published in the last three months. Therefore, TDG receives a moderate consensus buying rating. Based on the target for an average price of $ 500.58, the shares are ready to remain tied for now. (See TDG stock analysis for TipRanks) Cemex SAB (CX) Cemex is considered one of the leading players in the building materials industry, with the company producing and distributing cement, concrete and mixtures. As its risk / profit profile has just become more positive, now may be the time to increase its shares, says Morgan Stanley. Covering Morgan Stanley’s stock, analyst Nikolai Lipman believes that CX’s upward trend for the third quarter and FY20, which was well ahead of consensus, was “the catalyst that builds a bridge to a favorable change in risk and profit.” In addition, the shares are trading at 6.4 2020e EV / EBITDA, which is cheaper compared to its historical results and its counterparts, according to the analyst. With that in mind, Lipman argues that “CX is primarily a good, strong indebtedness reduction story with a call option on what could be the exclusive U.S. cement market if the U.S. Congress approves an infrastructure package in 2021.” … If we get a US infrastructure package after 2020, it would add icing to the cake, we believe, and take the market from good to potentially great. “Although a large multi-year package depends on the results of the US presidential and congressional elections, even in the main case, Lipman expects the cement to show price strength in the United States. It should be noted that Lipman believes that next year may be relatively smooth, but in this case he expects the industry to stop 90% capacity utilization and grow from there. On top of that, pricing in Mexico is holding up. This “significantly reduces the risk of downsizing and helps to positively distort the risk-gain,” according to Lipman. What else works in favor of CX? Demand for cement has so far pleasantly surprised Lippmann, with an increase observed during the first stage of the pandemic. He cites the DIY maintenance work and the Ministry of Transport during low traffic and heavy housing construction as drivers of this demand. Everything the CX uses convinced Lippmann to evaluate overweight stocks (ie buy). Along with the call, he applied a price of $ 6, which implies a 50% potential for increase. (To watch Lippmann’s recording, click here) Turning to the rest of the analyst community, opinions are divided almost evenly. 6 purchases and 5 retentions are added to a moderate consensus rating for a purchase. At $ 4.16, the average price target assumes a 4% upside potential. (See Cemex stock analysis for TipRanks.) To find good ideas for trading stocks at attractive ratings, visit TipRanks’ Best Buy Shares, a newly created tool that brings together all insights into TipRanks ownership. Disclaimer: The views expressed in this article are those of the analysts submitted. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.