Another day on Wall Street, another dramatic swing in the opposite direction from stocks. With another day of swift gains following up the prior day’s steep losses, investors globally are wondering the same thing: Is this recent bout of intense volatility here to stay? Driven by the onslaught of fears tied to the coronavirus from China, stocks have embarked on a roller-coaster ride that has seen the S&P 500 jump back and forth between the red or green.
Breathe, this is not the time to panic. Wall Street analysts remind investors that if they take a step back and focus on the bigger picture, it isn’t all doom and gloom. Hidden among the rubble, gems can still be found. We are referring to the names that unlike the broader market, have managed to stay afloat amid the ongoing public health crisis.
With this in mind, we called on the analyst community for guidance, and used TipRanks’ Stock Screener tool to pinpoint five stocks to buy that are maintaining their bearings amid all the chaos. Not only has each received substantial support from the Street’s pros, but all of the tickers also boast some noteworthy upside potential from current levels. Here are all the details.
Strong Stocks to Buy: Moderna (MRNA)
This biotech has been grabbing headlines left and right recently thanks to its efforts to develop a COVID-19 vaccine. Moderna (NASDAQ:MRNA), which specializes in using messenger RNA (mRNA) to instruct patients’ own cells to produce the necessary proteins to ward off diseases, has surged 34% in the last month, with the analyst community betting that more gains are on the way.
On March 16, MRNA announced that the first healthy patient in the Phase 1 trial of its mRNA-1273 vaccine candidate for COVID-19 had been dosed. Piper Sandler analyst Edward Tenthoff argues that this development is a major step forward as the resulting clinical data, which is slated for release this summer, could allow the company to begin a larger, registrational trial as early as this fall.
Should the experimental vaccine prove to be effective, Tenthoff thinks MRNA would be able to design “several first-in-class” vaccines against other infectious diseases in the next ten years. In line with his optimistic take, the five-star analyst reiterated his bullish call. Not to mention he bumped up the price target from $32 to $34, implying 34% upside potential.
Turning now to the rest of the Street, other analysts are on the same page. Its Strong Buy consensus rating breaks down into 6 Buys and 2 Holds assigned in the last three months. Additionally, the $31.67 average price target brings the potential upside growth to 27%. As more analysts adjust their targets to account for the recent share price movements, this figure stands to increase. See the MRNA stock analysis.
Similarly, biotech company Novavax (NASDAQ:NVAX) has entered the fight against COVID-19, and is holding up strong as a result with a 236% year-to-date gain.
It recently announced that the Coalition for Epidemic Preparedness Innovations (CEPI) had given it a $4 million grant to develop a vaccine against the deadly virus. That being said, one analyst has cited the company’s other product candidate as being the driving force behind his bullish thesis.
Novavax is slated to read out top-line Phase 3 NanoFlu data by the end of 1Q20. NanoFlu, its recombinant quadrivalent seasonal influenza vaccine candidate, is being evaluated with its proprietary Matrix-M adjuvant in patients at least 65 years old to determine its immunogenicity and safety compared to a U.S.-licensed quadrivalent influenza vaccine (Fluzone Quadrivalent).
Weighing in on NVAX for Cantor Fitzgerald, analyst Charles Duncan wrote, “We view this study as risk-reduced as the Phase 2 study showed NanoFlu had a greater response against the homologous and drifted H3N2 strain than Fluzone High Dose (HD), and importantly, showed a robust T cell response.”
Should the results be favorable, the company will then be able to file a BLA so it can get licensure and initiate a Phase 3 efficacy study. Based on all that NVAX has going for it, Duncan handed out a ratings upgrade, from Neutral to Overweight. Adding to the good news, he also lifted the price target from $6 to $16. This new target implies shares could surge 18% in the next year.
With 100% Street support, or five Buy ratings to be exact, the message is clear: NVAX is a Strong Buy. At $15.25, the average price target puts the upside potential at 10%. See the NVAX stock analysis.
Also inhabiting the healthcare space, Vaxart (NASDAQ:VXRT) has managed to differentiate itself from its peers with a unique approach that involves using tablets instead of injections to deliver vaccines. Soaring a whopping 371% year to date, it’s no wonder Wall Street has been captivated by this name.
More good news came on March 18 after the company stated it had sealed the deal with Emergent BioSolutions. Based on the terms of the agreement, Emergent will use its molecule-to-market contract development and manufacturing (CDMO) services to advance Vaxart’s oral vaccine candidate for COVID-19. The experimental vaccine uses VXRT’s VAAST technology platform.
Expounding on the implications of this development, H.C. Wainwright’s Vernon Bernardino commented, “While we do not model any contribution from potential future sales of an oral COVID-19 vaccine at this time, we view Vaxart’s agreement with Emergent as positive as it addresses the company’s need for future scalability and leverages Emergent’s expertise in large-scale manufacturing… we look for potential initiation of a Phase 1 clinical trial in first-half 2020 as a positive catalyst.”
On top of this, the vaccine’s design makes it especially promising when it comes to COVID-19, in Bernardino’s opinion. “We believe an oral delivery vaccine would be highly differentiated and could see significant future utility in the control and prevention of COVID-19, particularly in cases of fecal-oral transmission,” he explained.
To this end, the H.C. Wainwright analyst maintained both his “Buy” recommendation and $3 price target. Should this target be met, a possible twelve-month gain of 74% could be in the cards. See the VXRT stock analysis.
Zoom Video (ZM)
With more work being done at home, Zoom Video‘s (NASDAQ:ZM) customer base has expanded rapidly amid the onset of the public health crisis. Year to date, the video conferencing company’s shares have skyrocketed 134%, and one analyst believes that its long-term growth story is only just beginning.
J.P. Morgan analyst Sterling Auty notes that this quarter has seen usage spike as a result of COVID-19-induced work and travel restrictions. However, some of the hype surrounding the company might be somewhat overblown. Most of the gains in usage came from the free service rather than from paying customers, and thus, it didn’t have a material impact on its fourth quarter results. That being said, Auty thinks that an increase in even free usage will translate to improved long-term market penetration.
Expanding on this, Auty commented, “Our view is that the virus outbreak provides ZM with an opportunity to showcase how their product ‘simply works’ and is a potential driver for the long-term revenue opportunity in Asia which is still relatively underpenetrated.”
It should also be noted that for the third quarter in a row, the company acquired 7,800 net customers with 11-plus employees, and only one year after its launch, Zoom Phone has over 2,900 customers with 10-plus employees. ZM also reported GA for another 11 countries for Zoom phone, bringing the total to 18. This prompted Auty to state, “We continue to believe that Zoom Phone adoption could be an additional lever for growth.”
It makes sense, then, that Auty remains bullish on ZM. Along with his “Overweight” call, he boosted the price target from $125 to $150.
As for the rest of the Street, opinions are more varied. Its Moderate Buy consensus rating breaks down into six “Buys,” 11 “Holds” and one “Sell” issued in the last three months. See the ZM stock analysis.
Like Zoom, Roku (NASDAQ:ROKU) stands to see its usage expand as people seek entertainment options to make being stuck at home more bearable. As such, shares have climbed 36% higher in the last five days, and some analysts have interpreted this to mean that its future looks bright.
Writing for Needham, analyst Laura Martin believes that Roku has the strongest standing in the ad-based video on demand (AVOD) space. It boasts a considerable reach, with its installed base of 37 million unique U.S. homes representing 45% of streaming homes in the U.S.
As the Roku Channel sells all of its content to every AVOD app on its platform, Roku’s data is superior, enabling it to target its ads more effectively than its peers. Martin added, “Any competitor with fewer or lower quality data points than Roku quickly falls behind making it nearly impossible to catch up with Roku over time.”
On top of this, Martin argued, “We believe a free ad-driven streaming service adds value to SVOD through; 1) Spotify has proven that a free tier widens the top of the purchase funnel which drives low-cost sub growth for sister subscription video on demand (SVOD) services; 2) as consumers spend more hours viewing SVOD services with no ads, advantage units become more valuable owing to rarity value; and, 3) there is currently about $70B/year of advantage revenue on linear TV and consensus estimates are that much of this will follow audiences to AVOD, suggesting meaningful economic upside.”
In line with her bullish take, Martin left a “Buy” rating and $200 price target on the stock. This target conveys her confidence in Roku’s ability to skyrocket 106% in the coming twelve months. See the ROKU stock analysis.
TipRanks offers investors the latest insight into eight different sectors by tracking the activity of over 5,000 Wall Street analysts. As of this writing, Maya Sasson did not hold a position in any of the aforementioned securities.