It may have fallen massively (over 50%) from its highs, but a new analysts day and corporate update from Otonomy Inc. (NASDAQ: OTIC) also may have tipped the hand for a lot of upside ahead. The company can fully fund itself to 2018, and Merrill Lynch reversed its Underperform rating by upgrading the stock to Buy on Friday.
The firm also raised its price objective to $31.00 from $29.00, versus a current price of $19.15. Merrill Lynch likes Otonomy’s growth potential and management’s strategy in the underserved otology (ear) market. Otonomy is believed to have multiple shots here by targeting indications with no currently approved drugs.
Otonomy’s lead product, Otiprio, is awaiting FDA approval by year-end, and the risk/reward is believed to now be skewed to the upside. Merrill Lynch is far from being the top price here though.
SunEdison Inc. (NYSE: SUNE) saw many price target cuts in the past week. Many things are going wrong for this renewable energy company, even a failed acquisition, but there is still potentially a great value here, if several analysts are not just hanging on to unjustified optimism.
Despite all those analyst price target cuts, we have several analyst views this week, and some of the price targets are still implying that SunEdison shares could double. Shares closed trading at $9.25 on Friday. We did question whether analysts are being cautious enough given the current woes, but we will leave that judgment up to you.
With several things going for it, and we are starting to see more analyst and investor interest in Twitter Inc. (NYSE: TWTR). Jack Dorsey was just named its permanent CEO, the company is launching its “Moments” to better capture news breaks, and the company may expand the 140 character limitation. Even the Saudi Prince Alwaleed bin Talal boosted his stake.
Independent research firm Argus now sees roughly 50% upside in the stock, with its $45.00 price target being almost 20% higher than the consensus analyst target. Twitter shares were trading near $31.00 late on Friday, the highest share price since the end of July.
Azure Midstream Partners
Shares of Azure Midstream Partners L.P. (NYSE: AZUR) recovered handily this week, with one research report potentially a huge catalyst, above and beyond the recovery in oil and energy. Janney Capital Markets maintained its Buy rating on Azure Midstream Partners and maintained its fair value estimate of $30.00.
Janney believes the company’s distribution is both safe and sustainable (well into double-digit yield equivalent) and also thinks it is a special opportunity for investors to add to positions. Azure shares closed trading at $8.19 on Friday, and its 52-week range is $5.29 to $24.18.
Again, we cannot stress enough that analyst calls with 50% to 100% are by nature going to bring more risk than traditional Dow or S&P 500 stocks. Some of these companies would be suitable only for very aggressive investors. No widows and orphans funds should dare consider calls of this sort.