Mega stocks may suck up all the headlines, but there are deals and opportunities to be found among the smaller companies, as well. We’ve used TipRanks’ Trending Stocks tool to find three stocks that top analysts are highlighting right now.
For investors, these stocks offer real advantages: high upside potential and lower cost of entry, based on solid positions in strong niches. These are companies primed to take off as the market continues to gain (the S&P 500 is up 3.6% in the last 30 days). Let’s find out what the analysts have to say about them.
Exact Sciences Corporation
In the world of cancer treatment, early detection and prevention are worth more than the most cutting-edge treatment. Exact Sciences (EXAS – Get Report), established in 1994, focuses on early detection of colorectal cancer, and its first product, the at-home screening test Cologuard, was approved by the FDA in 2014.
Exact Sciences received more good news from the FDA this month, as the agency expanded the age-range for Cologuard users. It had previously been approved for patients over 50; now, it has been approved for at-risk patient over 45. The FDA was not expected to make this move until next year, and the fast-tracked approval is expected to boost Cologuard sales. In a statement after the announcement, CEO Kevin Conroy said, “We are giving health care providers a sensitive, noninvasive option that has the potential to help combat the rise of colorectal cancer rates among this younger group of people.”
Leerink Partners analyst Puneet Souda noted of the move, “With an additional 19M patients to their overall population, EXAS is adding a $3B market opportunity, according to previous management commentary, which we believe offers additional upside to their $800M - $810M revenue guide for FY19.” While Souda declined to set a specific price target, he did add, “We remain Outperform-rated on EXAS given our view that Cologuard remains highly underpenetrated in a 100M+ patient strong market.”
5-star analyst Mark Massaro, from Canaccord Genuity, agrees that the future is bullish for EXAS. He writes, “EXAS this morning announced FDA approval for Cologuard for average- risk individuals ages 45 and older, expanding on its previous indication of age 50 and older. By our estimates, this adds an incremental $3B TAM for EXAS, summing to a Cologuard TAM of $18B and ~106M Americans… We reiterate EXAS as a top pick and our $135 PT.” Massaro’s $135 price target implies an upside of 38% for the stock.
The analyst consensus on EXAS is a Strong Buy, based on a unanimous 11 buy ratings. Shares are trading for $98, and the average price target of $132 suggests a 34% upside potential.
Teladoc Health, Inc.
Cologuard puts one particular screening test at the patient’s convenience. Teladoc (TDOC – Get Report) uses digital communications to bring the whole office appointment directly to the patient. The company offers on-demand remote medical care, using videoconferencing to provide non-emergency services for ear-nose-throat issues, prescription refills for non-addictive medications, lab referrals, and basic medical advice and diagnoses. Teladoc describes it as “remote house calls by primary care doctors.”
The oldest telehealth company, Teladoc started out in 2002 and went public in 2015. The company has expanded its customer base consistently, boasting 8.1 million members in 2014 and 10.6 million in 2015. It has since nearly doubled, and now claims over 20 million members and 95% customer satisfaction.
Teladoc may face increased competition in the near future, as Amazon (AMZN – Get Report) announced this week that it will open a pilot program, offering similar services, in the Seattle area. The prospect of competition from the deep pockets of Amazon prompted a dip in TDOC shares, with some analysts saying that the slip was a buying opportunity.
After the announcement. Canaccord Genuity analyst Richard Close reiterated both his buy rating on the stock and his $95 price target. He said, “We would use any weakness in Teladoc shares as a buying opportunity. The Amazon news is likely to unsettle some investors, but virtual care remains in the early stages and Teladoc continues to be the domestic and global leader.” His price target implies an impressive 36% upside for Teladoc.
Lisa Gill, from JPMorgan, also takes a bullish stand on TDOC, basing her view on investor meetings recently hosted by company management. She wrote of the meetings, “While nothing materially new came out of them, management's positive commentary and tone again served to reinforce our bullish view on the outlook. We continue to see a significant amount of runway in the telehealth market. Teladoc is very well positioned as the only comprehensive virtual care delivery solution.” Gill’s $83 price target indicates her confidence in a 19% upside.
Overall, TDOC shares get a Strong Buy consensus, based on a unanimous 11 buys. The average share price of $86 suggests a 25% upside from the current trading price of $68.
Etsy (ETSY – Get Report) fills the online store niche for arts and craft, heavily emphasizing handmade or vintage and collectible items. The site also features supplies for crafters of every sort. Etsy’s online store attracts a wide range of sellers, offering everything from toys to quilts to art and photography.
Etsy has announced three new initiatives this summer, making it a more attractive platform for sellers and a more profitable stock for investors. In July, Etsy acquired music marketplace Reverb for $275 million. CFO Rachel Glaser said earlier this year that Etsy is “interested in marketplaces that have similar business model characteristics to us but might have different products and different buyer segments in completely different ways.” The Reverb acquisition underlines that stance.
Also in July, Etsy announced that sellers will be able to guarantee free shipping for orders over $35, a move that will surely be popular with customers, and later in the summer the company unveiled a sellers’ tool, Etsy Ads, which is expected to boost bottom line revenue.
RBC Capital’s Mark Mahaney is encouraged by Etsy’s recent moves. He upgraded his outlook on the stock from neutral to buy and boosted his price target by 8% to $68. He wrote, “Over the past two months, Etsy has announced three initiatives we believe could have a mid-to-long-term positive impact on Etsy’s business and upside… Etsy is becoming more special.” Mahaney’s price target suggests an upside of 25%.
Also giving Etsy a buy rating is KeyBanc’s Edward Yruma. Yruma studied the free shipping initiative, and wrote, “Feedback in the Etsy forums has been decidedly mixed (as expected), but we believe that this will serve as a strong LT GMS driver… We believe Etsy still has several visible self-help initiatives, and is becoming a much better retailer. The new management’s initiatives to grow GMS and a renewed focus on operational discipline should position Etsy well going forward.” Yruma’s $90 price target implies a robust 66% upside for the stock.
Etsy’s Strong Buy consensus rating comes from 10 buys and 1 hold. The stock is selling for $54, and the average price target suggests an upside potential of 39%.
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