The stock market’s recent meltdown has been based on a potent combination of omicron fears, rising inflation, and the prospect of the Fed hiking rates at a rapid pace in an effort to curb the surge. As such, the real prospect of a bear market has reared its ugly head.
However, Goldman Sachs’ chief global equity strategist Peter Oppenheimer does not think it is time to sound the alarm; Oppenheimer believes any rate hikes this year won’t be too steep. This should mark the current period as a correction which will allow the bull market to continue, rather than signifying the beginning of a new down cycle. In fact, the strategist has some simple advice for investors.
"Any further significant weakness at the index level should be seen as a buying opportunity, in our view, albeit with moderate upside through the year as a whole," Oppenheimer wrote.
Against this backdrop, the analysts at Goldman Sachs have been scouring the heap of discounted stocks and have zeroed in on 3 names which they see as primed to push higher from here – by an order of 70% or more, as it happens.
We ran these tickers through the TipRanks database to see what the rest of the Street makes of their chances. Turns out the analyst consensus rates all 3 as Strong Buys with plenty of gains projected too. Let’s take a closer look.
Bath & Body Words (BBWI)
We'll start with a well-known name in retail, Bath & Body Works. Last March, this retailer underwent an upper-level restructuring, when the parent company, L-Brands, spun off its other subsidiary, Victoria’s Secret, as an independent entity. After the split was complete, L-Brands changed its name to Bath & Body Works, to reflect that it now has just the one subsidiary, and changed the ticker to BBWI.
Looking ahead to the Q4 numbers, the company released optimistic forecast earlier this month. The company had previously published earnings guidance for the fourth quarter of $2.10 to $2.25 per share; in its revision, the company has said that it expects earnings to be at the high end of that range, well above the 4Q20 EPS of $1.96. The company will report its Q4 results on February 23.
In a move to boost sales, BBWI introduced a loyalty rewards program last year, offering customers points for every dollar spent. Accumulated points can be traded in for free items at the stores. The loyalty program was introduced in select markets last year, and will be expanding to the full chain later this year.
That loyalty program is a key point for Goldman Sachs' 5-star analyst Kate McShane, who says of BBWI, “We believe there is upside potential to current consensus estimates given the expected rollout of the company’s loyalty program to the entire chain in mid-2022… [We] reiterate the long-term opportunity in category expansion, including hair care and skin care, which we think remains underappreciated by investors based on our conversations, recognizing an earnings impact is not likely until 2024+. Additionally, BBWI offers an attractive opportunity from a valuation perspective…”
To this end, McShane rates the stock a Buy (the stock is on her Americas Conviction List) and sets a price target of $93, implying an upside of 70% in the year ahead. (To watch McShane’s track record, click here)
The current incarnation of this long-time retail stalwart has attracted 13 Buy ratings from Wall Street, which overweigh the 3 Holds for a Strong Buy consensus rating. BBWI is priced at $54.65 and its $88.75 average price target suggests a 62% upside from that level. (See BBWI stock forecast on TipRanks)
The second company we’re looking at is VTEX, a Brazilian digital commerce SaaS platform for retailers and brands. The company offers enterprise customers tools for executing digital selling strategies, building online stores, managing orders across online channels, and creating third-party vendor online marketplaces. The company is part of an expanding digital commerce scene in Latin America, and is reaching out to a global audience. VTEX boasts of 2,000 enterprise customers, with 2,500 online stores in 32 countries.
VTEX took advantage of the rising market conditions last year to go public. VTEX's stock started trading on the New York Exchange on July 21, with an initial price of $19 per share. Overall, the company brought in net proceeds of $361 million. Since then, however, the stock has fallen ~70%.
While VTEX has been running net losses since the IPO, per the regular financial reports, the company has also shown gains on some important metrics. In its 3Q21 report, the most recent reported, VTEX showed a 15% year-over-year gain at the top line, with revenue reaching $31.8 million. This included subscription revenues of $29.6 million, which grew 12% yoy and made up 93% of the total.
Covering the stock for Goldman Sachs, analyst Diego Aragao thinks the current low share price is a chance for investors to get in.
“We now see a more asymmetric risk-reward opportunity for VTEX… We believe that the recent months’ sell-off is unwarranted, creating a valuable entry opportunity into a leading player in LatAm e-commerce with fast-growing revenues, hard-currencies exposure, and attractive geographical-expansion optionalities… While we recognize that near-term offers limited triggers (mostly earnings results and qualitative data points regarding international business) and still-constrained margins, we believe the medium to long term offers a differentiated growth profile,” Aragao explained.
Unsurprisingly, Aragao rates VTEX shares a Buy, and his $16 price target points to a one-year upside of 135%. (To watch Aragao’s track record, click here)
This relatively new stock has picked up 3 analyst reviews. They all agree that it’s a Buy, making the consensus view on the Street a unanimous Strong Buy. The shares are selling for $6.78 and have a $13 average price target, for an upside potential of ~92%. (See VTEX stock forecast on TipRanks)
We’ll wrap up with a biotech stock, Arvinas. This clinical-stage biopharma research company is working on protein degradation therapeutics, an exciting field that offers the promise of a new class of drugs in the precision-pharmaceutical niche. Arvinas is working to use natural protein disposal systems to create tailor-made drugs that will target specific disease-related proteins and protein functions, by causing degradation and disposal of disease-causing molecules.
Arvinas is developing its drug candidates through a proprietary platform, PROTAC, designed to engineer proteolysis targeting chimeras. The two leading drug candidates are ARV-110 (in collaboration with Pfizer) and ARV-471, which showed significant positive results in preclinical and early-stage clinical testing. Both are now undergoing Phase 2 trials.
In December, Arvinas released data on earlier clinical work with ARV-471, a potential treatment for ER+/HER2 breast cancer. The data showed a ‘favorable tolerability profile’ for the drug, in a Phase 1 dose escalation test. According to Arvinas, ARV-471 showed “Robust ER degradation was observed at all dose levels, reaching 89% reduction of ER.” The drug is scheduled to enter two Phase 3 registrational clinical trials during 2022.
Meanwhile, ARV-110 is being tested as a treatment for prostate cancer, and is currently undergoing the ARDENT Phase 2 clinical trial. Arvinas expects to release full data from the earlier Phase 1 trial, along with interim data from the ARDENT trial at the ASCO Genitourinary Cancers Symposium in February.
Arvinas stock has caught the eye of Goldman Sachs 5-star analyst Madhu Kumar, who sees the company's drug candidates in a sound position.
"We were impressed by initial results from interim Phase 1/2 study of ARV-110 in mCRPC [and] encouraged by the possibility of ARV-110 to unlock value in the mCRPC therapeutic landscape as well as validating ARVN’s PROTAC platform as we await additional clinical data," Kumar opined.
"Beyond ARV-110, we are intrigued by the opportunity for ER PROTAC ARV-471 inER+/HER2- BC, given the emergence of drug resistance to currently approved therapies… We look forward to additional Phase 1 clinical data from ARV-471 in ER+/HER2- BC as a potential value driver on the forward," the analyst added
Based on above, Kumar puts a Buy rating on ARVN, while his $157 price target indicates the possibility of a robust 138% one-year upside. (To watch Kumar’s track record, click here)
All in all, there are 7 positive reviews on this stock, giving it a unanimous Strong Buy consensus rating. ARVN has an average price target of $136.80, suggesting ~108% upside from the share price of $65.90. (See ARVN stock forecast on TipRanks)
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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.