Those 3 penny stocks have huge upside potential, Cowen says
It's a mixed bag when it comes to opinions on penny stocks. These tickers, trading for less than $ 5 per share, share Wall Street like no other. Market watchers either love them or hate them. The appeal is easy to understand. First and foremost, you are getting more for your money. When bargain-priced stocks change hands, even a seemingly tiny appreciation in the stock price can result in monstrous percentage gains. However, for some, risk is too much of a threat to ignore. If you look under the hood of these budget names, you may find very real problems like poor fundamentals or impending headwinds. So how are investors supposed to spot the penny stocks poised to move from rags to riches? With that in mind, we wanted to take a closer look at three penny stocks that are loved by the pros, the analysts at investment firm Cowen. According to the company, all three could soar in the coming year. Using TipRanks' database, we learned why Cowen analysts are knocking on the table despite the risk involved. Neos Therapeutics (NEOS) Neos Therapeutics develops and markets innovative products and aims to improve the lives of patients with attention deficit hyperactivity disorder (ADHD) and other diseases of the central nervous system (CNS). While that name has had issues in the past, Cowen believes that now is the time to buy $ 0.47 each of stock. Analyst Ken Cacciatore, who writes for the company, acknowledges the momentum driven by Adzenys XR-ODT, the company's amphetamine. Treatment for ADHD is based, and Cotempla, its methylphenidate-based CNS stimulant also developed for ADHD, has slowed due to the pandemic. However, based on recent prescribing trends, the analyst sees "signs of recovery ahead of the acceleration of back to school (via video / classroom) in the fourth quarter". Commenting on this, Cacciatore stated, “We continue to believe that management is taking the right steps with the strategic improvements that appear to benefit from the more targeted targeting of prescribers and the faster roll-out of the Newco-Pay Assistance / Fulfillment Program (Rx Connect) Improve profitability per recipe. Given Rx Connect's early success alongside its spending cut plan and sales force reorganization, we believe Neos could reach profitability by early 2022. “With Adzenys and Cotempla net sales per pack up 6% year over year, Cacciatore argues the company's efforts are paying off. "We reiterate that these data points reflect the improved commercial approach and effectiveness of the company's Neos Rx Connect pharmacy program, which simplifies previously more complex prescription fulfillment and co-payment assistance," commented Rx Connect Write prescriptions for Cotempla and Adzenys without worrying about patient callbacks. According to management, 30% of prescriptions are currently being met through this program, and with the addition of several large regional pharmacy chains, the total number of partner pharmacies in June was nearly 900, compared to 800 at the end of Q1 The fact that NEOS is the only company that has both a methylphenidate and an amphetamine alternative dose formulation product to treat ADHD is enough to make it a standout product, according to Cacciatore. He calls Cotempla the "perfect match for Adzenys," noting that each asset covers half of the large stimulant market. The analyst added, "Adzenys XR-ODT has seen impressive growth in prescriptions over the past year and is now The ADHD Alternative Form of Choice that replaced Pfizer's market-leading Quillivant XR as its new market share hit # 1. “Also very promising is NEOS Adzenys ER, a liquid suspension stimulant product with extended release drug for ADHD. The product is based on amphetamine like Adzenys XR-ODT, but is an alternative dosage form for patients who do not prefer tablets or capsules. Cacciatore points out that the success of the liquid alternative dosage form was already proven when Pfizer's Quillivant XR had annual sales of over $ 100 million in 2017. To do this, Cacciatore rates NEOS at outperformance (i.e. buy) and a target price of $ 8. Should the target be achieved, a profit of twelve months in the form of a whopping 1,604% could be in stock. (To see Cacciatore's track record, click here.) Now, let's turn to the rest of the road. There have been 3 buys and no holds or sells posted in the past three months. As a result, NEOS has a strong buy consensus rating. At USD 8.33, the average price target is even more aggressive than Cacciatore's and implies an upside potential of 1674%. (See NEOS stock analysis on TipRanks.) Dynavax Technologies (DVAX) Dynavax brings extensive knowledge of toll-like receptor (TLR) and state-of-the-art adjuvant technology to the table and develops vaccines to protect the population. Thanks to its promising pipeline and $ 4.30 share price, Cowen believes investors should get into the action. The five-star analyst Phil Nadeau, who represents the company, names Heplisav as a key component of his bullish thesis. The product is an HBV vaccine that has been shown in a number of Phase 3 studies to be more effective than the other HBV vaccines currently on the market. Based on comments from the company's advisors, he argues that the asset could capture a significant portion of the global adult HBV vaccine market in excess of $ 500 million. DVAX also contributed to Nadeau's optimistic stance and agreed several partnerships to further investigate whether CpG 1018, the adjuvant in Heplisav, may improve the effectiveness of other vaccines. In September, DVAX announced its supply agreement with Valneva to produce up to 190 million doses of Valneva's COVID-19 vaccine candidate VLA2001 over a period of five years. This vaccine is an inactivated whole virus vaccine against the SARS-CoV-2 virus and contains the CpG 1018 adjuvant from DVAX. The clinical trials are expected to start by YE, with approval possibly due in 2H21. In addition, the UK government has secured a delivery of 60 million cans for € 470 million and there is an option for an additional 130 million cans for around € 900 million. DVAX has previously announced that CpG 1018 will become a widely used adjuvant and has "made rapid progress in implementation," says Nadeau. He notes that this deal is in line with that strategy and "in some ways represents a next step." He added, "The supply agreement is remarkable as it helps demonstrate the economics that successful partner vaccine development could bring." According to the company's guidelines, CpG 1018 could achieve 15-30% economics when used in partner vaccines. "Although management has not disclosed the exact economics of working with Valneva, we believe they are in line with DVAX guidelines and suggest that they are in the middle of the range," commented Nadeau. "In our opinion, DVAX is significantly undervalued for the potential of Heplisav and the CpG 1018 adjuvant," concluded Nadeau. So it should come as no surprise that Nadeau is on the cops' side. Along with an Outperform (i.e. Buy) rating, he sets a target price of $ 20 on the stock, indicating an upside potential of 370%. (To see Nadeau's track record, click here.) Other analysts share Nadeau's opinion. 3 buys and no holds or sells results in a strong buy consensus rating. With an average price target of $ 16, the upside potential is 276%. (See DVAX stock analysis on TipRanks) La Jolla Pharmaceutical (LJPC) Last but not least, we created La Jolla Pharmaceutical, which is innovative therapies for life-threatening diseases with significant unmet need. Because of its impressive technology, Cowen sees the $ 4 stock price as an attractive entry point. Analyst Phil Nadeau, who also covers DVAX for the company, highlights LJPC's first commercial product, Giapreza, a patented formulation of the naturally occurring hormone peptide angiotensin II as a point of strength. Angiotensin II is a powerful vasoconstrictor and an important regulator of blood pressure. The start was rocky and the pandemic hit the acute care segment in the hospital hard. Nevertheless, Nadeau remains optimistic. "… our consultants believe that CRH requires new vasopressors and we therefore remain confident that Giapreza can become a significant product over time," he said. LJPC also acquired Tetraphase in July. Xerava, a novel antibacterial fluorocycline developed to treat complicated intra-abdominal infections. Although the use of the therapy has most likely been affected by COVID-19, Nadeau has high hopes for the product. Nadeau argues that LJPC will be able to use its existing infrastructure to commercialize and promote Xerava with minimal additional spending expected. “Although Xerava has done so with many competitors, the market for antibiotics used to treat intra-abdominal infections is large – patients with appendicitis alone contribute to over 1 million hospital days per year in the US. Therefore, Xerava should continue to grow with the promotion, ”said the analyst. To that end, Nadeau predicts Xerava sales of $ 15 million in 2021, increasing to $ 60 million in 2024. Summing up, Nadeau stated: “La Jolla has a modest corporate value and will be undervalued if Giapreza and Xerava are successfully commercialized. “With the above in mind, Nadeau rates LJPC with an Outperform (ie Buy) rating along with a price target of $ 20. This goal conveys his confidence in LJPC's ability to grow 402% over the next year. What does the rest of the street have to say? When it comes to other analyst activity, it has been relatively calm. 2 There have been purchases and no holds or sells issued in the past three months. Therefore, LJPC receives a consensus rating for moderate buy. Based on the average price target of $ 14, stocks could rise 251% over the next year. (See LJPC stock analysis on TipRanks.) To find great ideas for trading penny stocks at attractive valuations, visit TipRanks 'Best Stocks to Buy, a newly launched tool that brings together all of TipRanks' stock insights. Disclaimer: The opinions expressed in this article are solely those of the analysts presented. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.