Anyone involved in the investing game will know it’s all about “stock picking.” Choosing the right stock to put your money behind is vital to ensure strong returns on an investment. Therefore, when the Wall Street pros consider a name to be a 'Top Pick,' investors should take note.
Using the TipRanks platform, we’ve looked up details on two stocks that have recently gotten ‘Top Pick’ designation from some of the Street’s analysts.
So, let’s dive into the details and find out what makes them so. Using a combination of market data, company reports, and analyst commentary, we can get an idea of just what makes these stocks compelling picks for the rest of 2022, and why both are rated as Strong Buys by the analyst consensus.
Zeta Global Holdings (ZETA)
We’ll start with Zeta Global Holdings, a cloud-based online marketing company that offers its customers an omnichannel AI data analytics platform to supercharge customer acquisition and retention. The company has a huge dataset behind its platform, to support customers’ online outreach ops, boasting more than 235 million ‘opted in’ US individuals. The Zeta platform can sort through these and other datasets, allowing enterprise customers to reach up to 2.5 billion potential consumers.
Zeta has been in business since 2008, and has been a public entity since early last summer. The company has built up its business to a leading position in the online marketing world, and its customers can use the platform to develop personalized campaigns across a wide range of addressable channels, including social media, chats, connected TV, online video, and plenty more.
This is a lucrative niche, and Zeta saw its year-over-year revenues grow 20% in fiscal year 2020 and 25% in fiscal year 2021. So far this year, the results are still moving upwards; for 1H22, the revenue total of $263.5 million was up 26% y/y. The recent 2Q22 report showed a top line of $137 million, up 28% y/y. The company’s scaled customer count increased from 359 to 373 y/y, and free cash flow turned from a negative $1.8 million in 2Q21 to a positive result of $6.2 million in the recent 2Q22 release. Earnings ran a net loss, of 63 cents per share, but that was approximately 1/3 as much as the $1.92 quarterly net loss recorded one year earlier.
Covering this stock for Roth Capital, 5-star analyst Richard Baldry notes the continued strong growth and writes: “ZETA's 2Q22 results again well-exceeded our top and bottom line forecasts. Revenue growth accelerated to a near-term high at 28.4% yr/yr, while gross profit dollar growth of 37% yr/yr remained even faster as revenues become more self-platform centric. We believe this factor is not well appreciated, particularly given its unwarranted slow-growth valuation. With record scaled customer adds in 2Q22 and quota carrying headcount rising rapidly, ZETA remains our 2022 Top Pick."
Being a Top Pick comes with a Buy rating for the shares, and Baldry’s price target of $21 implies a robust upside of 198% in the year ahead. (To watch Baldry’s track record, click here)
Baldry may be particularly upbeat on this stock, but he’s not too far out of the main stream. Wall Street generally likes Zeta, as shown by the 6 to 2 split among the 8 recent analyst reviews, favoring Buys over Holds for that coveted Strong Buy consensus. The shares are selling for $7.08 and their $12.25 average price target indicates potential for ~74% upside over the next year. (See ZETA stock forecast on TipRanks)
Forma Therapeutics (FMTX)
Next up is Forma Therapeutics, a clinical-stage biopharma firm working on new treatments for rare blood disorders – cancers, and other hematological diseases. These are a difficult class of illnesses to treat, but the reward, measured in a large potential patient base, is significant.
To tap into that base, the company has an active development program, with two leading drug candidates; Etavopivat is a potential treatment for sickle cell disease (SCD), a dangerous genetic-based blood condition that is most common in African Americans, and olutasidenib is under study as a treatment for relapsed and/or refractory acute myeloid leukemia.
Previous reported Phase 1 data on etavopivat showed that the drug has promise in treating the frequency and severity of pain-related sickle cell events. Going forward, the company is continuing to enroll patients in a Phase 2/3 trial called Hibiscus. This study is expected to show data for interim analysis by the end of this year. Forma has also initiated a Phase 2 trial of etavopivat against sickle cell disease, and expects to have data for public release before 2023. The company is also planning a pediatric trial of the drug for younger SCD patients.
On the olutasidenib track, Forma has licensed development, manufacturing, and commercialization to Rigel Pharmaceuticals. There is currently an ongoing Phase 2 trial of olutasidenib to evaluate safety, efficacy, and pharmacokinetics, and an NDA for the drug has been filed. The FDA has given a PDUFA date of February 15, 2023.
Cantor Fitzgerald analyst Prakhar Agrawal lays out the line on this stock with a clear optimistic slant: “Sentiment on the stock has improved significantly over the past 3 months as there was greater appreciation of the valuation disconnect for a company with several catalysts in the near term, solid pipeline, and a strong cash runway (we estimate into 2H’24)... We expect Forma to outperform into the next set of catalysts in Q4 (Interim Analysis 1 for Phase 2 SCD, Phase 2 TD-SCD, Beta Thal). Focus for etavopivat has been on SCD but we think it has broad potential in several hematology indications... FMTX is our top pick for rest of the year.”
In Agrawal’s opinion, this Top Pick earns an Overweight, or Buy, rating, and the analyst’s $23 price target suggest a 12-month upside potential of 93%. (To watch Agrawal’s track record, click here)
While this small biotech stock has only picked up 3 recent analyst reviews, they are all positive – giving the stock a unanimous Strong Buy consensus rating. The shares have an average price target of $32.33, which indicates a hefty one-year upside potential of ~197% from the current trading price of $10.87. (See FMTX stock forecast on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched 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 intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.