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Jefferies Has 4 Fallen Angels Stocks to Buy With Big Potential Upside

One of the worst things that can happen is when a well-thought-out investment goes awry because of external factors that were never considered into the original thesis for purchasing in the first place. Experienced investors know that this happens more often than one would think, and often times, while painful for current owners, it can offer new owners incredible value.

A new research report from Jefferies highlights four solid companies that are either members of the guilt by association club or seem to have turned things around and could be headed higher in the near term. All are rated Buy at Jefferies.

Anacor Pharmaceuticals

This company has been hit hard as upheavals in the specialty pharmaceutical area have proved damaging to all. Anacor Pharmaceuticals Inc. (NASDAQ: ANAC) is a biopharmaceutical company focused on discovering, developing and commercializing novel small-molecule therapeutics derived from its boron chemistry platform.

Anacor’s first approved drug, Kerydin (tavaborole) topical solution, 5%, is an oxaborole antifungal approved by the U.S. Food and Drug Administration (FDA) in July 2014 for the topical treatment of onychomycosis of the toenails. In July 2014, Anacor entered into an exclusive agreement with Sandoz, a Novartis company, pursuant to which PharmaDerm, the branded dermatology division of Sandoz, distributes and commercializes Kerydin in the United States.

Anacor’s lead product development candidate is Crisaborole, an investigational non-steroidal topical PDE-4 inhibitor for the potential treatment of mild-to-moderate atopic dermatitis and psoriasis. Beyond Kerydin and Crisaborole, Anacor has discovered three investigational compounds that it has out-licensed for further development.

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The Jefferies analyst remains positive on the Crisaborole prospects and they moved pricing up by 29% back in the summer as their checks reveal than branded prices for Elidel/Protopic have steadily increased.

The Jefferies price target for the stock is $171. The Thomson/First Call consensus price target is $182.25. Shares closed trading on Thursday at $92.03.

CA

The Jefferies team feels this company reported solid numbers this week and new business is growing faster than renewals. CA Inc. (NASDAQ: CA) provides information technology (IT) management software and solutions that help organizations plan, develop, manage and secure applications and IT infrastructure in the United States and internationally.

CA recently reported a fiscal second-quarter profit of $174 million. Earnings per share were right in line with Wall Street expectations. Although revenues were slightly lower, the overall quarter was solid. Forward guidance also remained in line with forecasts.

Jefferies feels that growth is outpacing renewals, which is a requirement for revenue growth. The analyst feels that CA’s stock is not priced for growth by many on Wall Street. So they see it having little downside if it doesn’t achieve growth, but good upside if it does.

CA investors receive a very solid 3.61% dividend. The Jefferies price target is $38, and the consensus target is lower at $30.32. The stock closed most recently at $28.02.

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