Investors have remained buyers of stocks throughout much of the summer, and a stronger than expected earnings season has kept the market near all-time highs. Still, the nine-year-old bull market of 2018 is acting differently than in the prior few years when investors were always rewarded for buying the dips in the market. Now investors have had to be careful about sticking with winners and avoiding losers. Those same investors are in a place of evaluating how they want their assets positioned in the second half of 2018 and beyond.
24/7 Wall St. reviews dozens of analyst upgrades, downgrades and initiations each weekday. This ends up being hundreds of analyst calls by the end of each week. The goal is to find new investing and new trading ideas for our readers. Some calls cover stocks to buy, and some cover stocks to sell or to avoid.
When it comes to “buy” ratings, there are many different names and many different levels of risk and return to consider. Most stocks receiving new Buy or Outperform analyst ratings in Dow Jones industrials or S&P 500 stocks come with projected upside of 8% to 10% at this stage in the bull market.
There is another type of Buy rating that is far more speculative, one in which the projected upside can be 50%, 100% or exponentially higher. These are generally much riskier than Dow or S&P 500 stocks. They rarely come with dividends, and many of the companies have limited operating history and revenues are either small or not due for years.
The biotech industry is among the riskiest of them all for investors. It is also where investors can routinely see shares rise massively on new drug development news. Those same investors just must never forget that they may be risking their entire investment in these speculative companies.
24/7 Wall St. has identified several biotech analyst calls from Wall Street wherein the analysts are projecting upside of 100% to about 400%. Again, these are highly speculative by nature, and they should be avoided by investors who are very conservative and who are looking for stable earnings and dividends.
AcelRx Targets Pain
AcelRx Pharmaceuticals Inc. (NASDAQ: ACRX) is a tiny company with less than a $200 million market cap. It focuses on the development and future commercialization of therapies to treat acute pain. The company also raised about $20 million in July via a secondary offering at $2.75 per share, and the stock most recently closed at $3.05 and has a 52-week trading range of $1.55 to $5.75.
Ladenburg Thalmann initiated AcelRx with a Buy rating and a $7 price target. This call for more than 100% in implied upside is actually the highest stock price target among the analysts covering the stock, and the shares had closed at $2.95 prior to the call.
BioXcel, for Alzheimer’s and Schizophrenia
BioXcel Therapeutics Inc. (NASDAQ BTAI) was featured this week by Canaccord Genuity with huge upside among a view on the firm’s upcoming catalyst biotech picks. Canaccord Genuity’s price target of $21 was up more than 100% from the current price of $8.15.
The firm cited multiple data readouts for BXCL501 (sublingual dexmedetomidine) data from Phase 1b pharmacokinetic/pharmacodynamic studies on intravenous dex (agitation in Alzheimer’s disease/schizophrenia), which could come in the second half of 2018. They also see a Phase 2 open-label proof of concept data could readout in late-2018.
BioXcel has a 52-week range of $6.76 to $14.79 a share and a mere $127 million market cap. Its shares were unmoved on Wednesday when the call was made.