One thing that has stretched multiples in the S&P 500 this year to a pricey 17 times earnings is that many people have chased a few stocks in the index much higher, and the bond proxy stocks in telecoms, consumer staples and utilities have all been pushed way above normal valuation levels. The fact of the matter is there are many reasonable stocks, but investors have to get out there and find them.
Finding them is one of the reasons we cover Jefferies top growth stocks to buy every week. The firm searches for growth with reasonable valuations and upside potential. This week’s group is no exception to that rule, with biotech, a medical devices stock and a top chip company that are all rated Buy at Jefferies.
Jefferies thinks this top company has virtually no competition in its space. Abiomed Inc. (NASDAQ: ABMD) engages in the research, development and sale of medical devices to assist or replace the pumping function of the failing heart. It also provides continuum of care to heart failure patients.
The company offers Impella 2.5 catheter, a percutaneous micro heart pump with integrated motor and sensors for use in interventional cardiology; Impella CP that provides partial circulatory support using an extracorporeal bypass control unit; Impella 5.0 catheter and Impella LD, which are percutaneous micro heart pumps with integrated motors and sensors for use primarily in the heart surgery suite; and Impella RP, a percutaneous catheter-based axial flow pump.
The company also manufactures and sells AB5000 circulatory support system for temporary support of acute heart failure patients in profound shock, including patients suffering from cardiogenic shock after a heart attack, postcardiotomy cardiogenic shock or myocarditis. In addition, the company engages in the research, development, prototyping and the pre-serial production of a percutaneous expandable catheter pump, which enhances blood circulation from the heart with an external drive shaft.
In the report the analysts noted the following:
Competition in the space remains non-existent and having only penetrated 7% of the market for pumps thus far, we believe if the company can sustain a 40% revenue growth rate for the next 5 years, the higher $1.8B goal for calendar year 2021 could be achievable.
The Jefferies price target for the stock is $145, and the Wall Street consensus target is $128.13 The shares closed most recently at $123.69.
Jefferies just recently upgraded this stock to Buy from a Hold rating. AveXis Inc. (NASDAQ: AVXS) went public in February and is a clinical-stage gene therapy company that engages in developing and commercializing novel treatments for patients suffering from rare and life-threatening neurological genetic diseases. Its initial product candidate is AVXS-101, a gene therapy product candidate that is in a Phase 1 clinical trial for the treatment of spinal muscular atrophy Type 1.
The company also intends to identify, acquire, develop and commercialize gene therapy product candidates for the treatment of other rare and life-threatening neurological genetic diseases. It has strategic collaboration and license agreements with Nationwide Children’s Hospital, the Research Institute at Nationwide Children’s Hospital, Regenxbio and Asklepios Biopharmaceutical.
Jefferies notes the stock is down almost 30% from highs printed in June and the company reported updated SMA type 1 data in conjunction with earnings. With solid efficacy so far, and additional positive feedback, the firm upgraded the shares to Buy.
The $42 Jefferies price target is lower than the consensus target of $50.25. Shares closed Friday up almost 6% on the day to $40.50.