Ooma Inc. (NYSE: OOMA) is being included here with a serious caveat. Credit Suisse, one of its IPO underwriting firms, started coverage as Outperform and with a $21.00 price target. This implies nearly a double from the current $11.05 close.
Ooma has been a dud of an IPO and its other analysts from the underwriting group were positive but with much more conservative price targets. Credit Suisse is the most positive by far, and we are just going to leave it at that for now.
Ophthotech Corp. (NASDAQ: OPHT) was started as Outperform with a $95 price target at Oppenheimer on Friday. This was against a $50.81 close before the call, and shares went out on Friday at $51.02. Oppenheimer likes that Opthotech’s Fovista Phase 3 programs are de-risked and said that wet AMD remains large unmet need and that its anti-fibrotic activity of Fovista underappreciated.
This Oppenheimer analyst target implied upside of almost 90%, and its market cap now is $1.77 billion. Ophthotech has a consensus price target of almost $83 and a 52-week range of $36.11 to $72.51.
The Oppenheimer report also suggests that the big upside case may not be seen immediately. This may not even be a 2015 story. Its report says:
We see the phase III programs significantly de-risked by the positive efficacy and safety data from a large-size, similarly designed, phase IIb trial. We also view a strong MOA and the anti-fibrotic activity observed in retrospective analysis of the phase IIb trial as supportive of the disease-modifying activity of Fovista, which could expand the market substantially (not in our model). Key catalysts for shares include interim data from a phase II fibrosis trial by YE15 and phase III trials readout by YE16.
Again, investors and traders need to be very mindful of the risks here. You will have noticed that most of these stocks have had some sort of problem — hence the huge upside calls in the value analysis.
24/7 Wall St. generally likes to offer a caveat or a counter-call on each call where massive upside is seen. This is not meant to confuse readers. It is meant to remind readers that the most bullish case is either not the norm or is not a view that is shared universally by all investors and analysts.
Speculative stocks with high price targets are most certainly not targeted toward conservative investors. Some of these may only be appropriate for the most aggressive investors.
One last reminder here is that analysts often have no additional information or industry knowledge than the top institutional investors or very savvy individual investors. Sometimes they are shown to have been way too aggressive, and sometimes they are just plain wrong. It happens.