Across the market, Cowen & Co. analysts see undervalued stocks.
They rolled out their individual best picks late in the week, highlighting their takes on compelling plays in healthcare, technology, industrials, and more.
Cigna Corp. CI,
But that’s not the whole bull case: “Cigna trades at the lowest multiple in [its] group, has the second-lowest percentage of sell-side buy ratings and its key fundamental risk (recession unemployment) is most overtly/visibly discounted by the market.”
Costco Wholesale Corp. COST,
“We believe Costco’s volume focused sales, item driven (rather than category driven) assortment, and large scaled operations position the company ahead of competitors in an environment of inflation and supply-chain challenges,” Cowen’s Oliver Chen wrote.
In media, Cowen’s John Blackledge sees big potential in Netflix Inc. NFLX,
But Netflix is an evolving company as it moves into 2023, armed with a new advertising-supported tier of service and a plan to cut down on perhaps 100 million global accounts that are sharing passwords.
Read: Netflix will crack down on password sharing next year — here’s how it will work
“We acknowledge that investors have likely started to price in some of the benefit from the ad tier,” Blackledge wrote, but “potential upside from these efforts is likely still underappreciated.”
Raytheon Technologies Corp. RTX,
“Investors don’t fully appreciate likely aftermarket recovery in 2023 or defense lift in 2024-25,” analyst Cai von Rumohr wrote.
Then there’s Biomarin Pharmaceutical Inc. BMRN,
“During 2023 we expect Voxzogo’s strong launch to continue, and Roctavian to be approved by the FDA.” Strong launches for both of those could drive compound annual growth in revenue of 17% through 2027, “among the highest in biotech.”
He added that Wall Street seems “overly cautious on the chances of FDA approval of Roctavian, while our clinical and regulatory consultants think approval is very likely.”
Voxzogo is for children with achondroplasia, while Roctavian is for severe hemophilia.
Iveric bio Inc. ISEE,
The company’s Zimura drug “has shown significant reduction in GA [Geographic Atrophy] lesion growth in two pivotal trials, with an exceptionally clean safety profile,” he said in a note to clients. “Our clinician discussions continue to reinforce
our belief that this is well in excess of a $2B+ opportunity for Zimura, even in a competitive market.”
Cacciatore offered that he’s “encouraged by all aspects of the story” and thinks “there continues to be a valuation disconnect.”
AstraZeneca PLC AZN,
Two compelling technology picks include Workday Inc. WDAY,
“We think investors under-appreciate how much WDAY has diversified its business vs. initial COVID days when WDAY’s business was more acutely disrupted,” wrote Cowen’s Derrick Wood, who named the stock his top pick. “We also think investors under-estimate the durability in back office spend in this environment.”
For colleague Joshua Buchalter, who tabbed Analog Devcies, the draw is “one of the best and cleanest capital return stories in semis.”
Buchalter likes the company’s “best-in-class margins and capital return profile with a fab-lite model that we believe is well positioned to sustain 10% annual dividend growth and a material repurchase program through-cycle.”
Speaking of cycles, Caterpillar Inc. CAT,
“We’ve long held that this cycle’s peak will come in 2024 or later for CAT. We think the Street is just starting to warm up to this view,” wrote Cowen’s Matt Elkott. “Recent checks suggest that infrastructure projects are beginning to trickle into the machinery sector, likely kicking off a multiyear cycle.”
Other favorites include Deciphera Pharmaceuticals Inc. DCPH,
Source: finance.yahoo.com