JPMorgan says these 2 stocks could increase by over 80%
After a volatile first quarter, the second quarter has got off to a good start, and the major indices are at – or close to – historic highs. The government bond market has also stabilized, as yields retreated after rising earlier in the year, allaying investor fears that inflation was spiraling out of control. In addition, the economic recovery appears to be accelerating at a faster rate than expected. “We expected the data to improve around this time, and the first signs are that the recovery is absolutely on track,” said Hugh Gimber, global market strategist at JP Morgan. “This is the period when the forecast of a strong recovery in growth begins to look more like the fact of a strong recovery in growth.” In this context, analysts at JP Morgan have identified 2 names which they believe should experience strong growth in the coming year; both are expected to generously reward investors with at least 80% earnings over the next few months. We scanned them in the TipRanks database to see what other Wall Street analysts had to say about them. Tencent Music Entertainment (TME) We’ll start in China, where Tencent Music Entertainment is the offspring of giant Chinese online company Tencent, and Spotify, the Swedish streaming company that makes music and playlists easier. Tencent Music had consistently strong sales and earnings over the past year, with the top line increasing year over year each quarter of 2020. The fourth quarter report showed $ 1.26 billion in the top line, the highest of the past two years, as well as earnings with 12 cents a share, up 33% year over year. Strong streaming revenues, which grew 29%, contributed to results. And, Tencent Music, thanks to its variety of apps, is the number one music streaming service in the Chinese online market – as shown by the 40.4% year-over-year increase in paid subscribers in the fourth quarter. In its quarterly results, the company reported 4.3 million net new users in the fourth quarter, reaching 56 million premium accounts active in its apps. That said, the stock has fallen sharply recently, like many other high-profile growth names, concerns about an overheated valuation have surfaced. But setbacks often mean an opportunity, and covering JPM’s stock, Alex Yao notes the strong growth in subscriptions, as well as the potential for monetization from the company’s other business, online advertising and long-running audio. “We believe that TME is entering a healthy development cycle with successive growth drivers: 1) music subscription remains the main driver of revenue with steadily improving payout ratio, 2) advertising revenue is growing rapidly and 3) active investments in a long-running audio initiative, which could become a new engine of growth in 2022 and beyond, “Yao noted. To this end, Yao is setting a price target of $ 36 on TME, suggesting a one-year increase of 84%, to support its overweight rating (ie (To see Yao’s track record, click here) Overall, TME has a thumbs-up from Wall Street. 11 saved reviews, 7 are buy, 3 hold, and 1 sell, making the analyst consensus a moderate buy. The stocks are priced at $ 19.50, and their target average price is $ 30.19 implies a 55% hike for the coming months. (See TME market analysis on TipRanks ) Y-mAbs Therapeutics (YMAB) JPM’s next choice we’re looking for at is Y-mAbs, an advanced clinical biopharmaceutical company that focuses on pediatric oncology. The company is working on the development and commercialization of new anti-cancer treatments based on antibodies. Y-mAbs has one drug – Danyelza – approved for use in the treatment of neuroblastoma in children 1 year of age and older, and a “ large and advanced ” pipeline of drug candidates at different stages of the clinical process, as well as five additional products in the pre-stages of clinical research. Having a drug approved is a “holy grail” for clinical biopharmaceutical companies, and in 4Q20 the Y-mAbs saw considerable revenue from Danyelza. The company announced in late December that it had agreed to sell the drug’s priority review voucher to United Therapeutics for $ 105 million. Y-mAbs will retain the rights to 60% of the net proceeds of the sale, under an agreement with Memorial Sloan Kettering. Also in December, the company announced a licensing agreement with SciClone. The partnership gives Y-mAbs and Danyelza an opening for the treatment of pediatric patients in China. The deal includes mainland China, Taiwan, Hong Kong and Macau, and is worth up to $ 120 million for the Y-mAbs. The company has entered into other agreements making Danyelza available in Eastern Europe and Russia. Danyelza is the flagship of Y-mAbs, but the company also has omburtamab in late stages of the pipeline. This drug candidate suffered a setback in October last year, when the FDA refused to file the company’s biologics license application, proposed for the treatment of pediatric patients with CNS / leptomeningeal metastases. Y-mAbs has been in constant communication with the FDA since then, with a new target date for the BLA at the end of 2Q21 or beginning of 3Q21. These two drugs – one approved and the other not yet – form the basis of JPM’s outlook on this stock. Analyst Tessa Romero writes, “Our thesis revolves around the risk-free nature of the pediatric oncology pipeline. Our recent KOL reviews are enthusiastic about the use of the main active ingredient Danyelza in patients with high risk neuroblastoma (NB). For the second main active omburtamab in NB metastatic to the central nervous system (CNS / LM of NB), while the “ Refuse to file ” last year and subsequent regulatory delays were certainly disappointing, we still see a high probability approval of the product in the 2Q / 3Q22 schedule… ”For the future, Romero sees optimistic prospects for the company:“ By coupling our anticipation of a healthy launch for Danyelza, with regulatory / clinical dynamics expected in the short and in the medium term we see stocks about to rebound and see an interesting buying opportunity at current levels. The analyst sets a price target of $ 52 on YMAB shares, which implies an increase of 86% for the coming year, and supports an overweight (ie buy) rating . (To look at Romero’s track record, click here) Overall, Wall Street critics range 3 to 1 in favor of buys versus holdbacks on Y-mAbs, giving the stock a Strong consensus rating Buy. The stocks have an average price target of $ 61.25, which suggests a potential upside of 121% this year. (See YMAB Stock Analysis on TipRanks) To get great ideas for stocks traded at attractive valuations, visit Top Stocks to Buy from TipRanks, a newly launched tool that brings together all the information about stocks from TipRanks. 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.