Despite a very difficult week for investors, more data came in to support the huge jobs number at the beginning of the month. The NFIB Small Business Optimism Index held steady at the highest reading since May, and September inventory numbers look like a positive revision to third-quarter GDP growth from 1.5% to 2.1%. In addition, the preliminary University of Michigan Sentiment Index rose to 93.1 from 90, recovering all the lost ground triggered by the China-related events of August. What that means for investors is an improving economy should bode well for growth stocks.
Each week Jefferies focuses on growth stocks calls in which solid data and numbers have come in to back up their overall positive thesis on the stocks. This week the analysts are positive on companies that took a shot price-wise last week and may be offering an even better entry point for investors.
This company reported outstanding earnings recently, made a huge acquisition and is a Jefferies Franchise pick stock as well. Activision Blizzard Inc. (NASDAQ: ATVI) develops and publishes online, personal computer (PC), video game console, handheld, mobile and tablet games worldwide. The company develops and publishes interactive entertainment software products through retail channels or digital downloads, as well as downloadable content to a range of gamers. Its Call of Duty franchise has propelled earnings for this industry powerhouse for years.
The big new recently was the company’s purchase of Candy Crush saga creator King Digital Entertainment. Jefferies, like most of Wall Street, thinks the buy is an outstanding move for the company, and specifically the synergies between the two companies is cited. The analysts feel that the key to unlocking some monster value is creating and cross-promoting the Activision product inside the King Digital mobile distribution network.
Jefferies also thinks the guidance the company gave when it reported is very conservative. The content the company will release in the rest of 2015 is outstanding and not fully reflected in the guidance. The growth in the quarter was particularly impressive given two challenges: the strong dollar and unfavorable comparisons to the prior year quarter, which were lifted by strong sales of The Amazing Spider-Man 2. Much of that growth was fueled by Destiny, Heroes of the Storm and Hearthstone, which now have 70 million registered players combined. The three titles have generated over $1.25 billion in non-GAAP revenues to date.
Activision investors receive a 0.7% dividend. The Jefferies price target recently was raised to $45. The Thomson/First Call consensus target is $41.46. Shares closed Friday at $34.59 and have dropped almost 15% since earlier this month.
This company is one of Wall Street’s favorites, and earnings were announced recently and were outstanding. BioMarin Pharmaceuticals Inc. (NASDAQ: BMRN) develops and commercializes innovative biopharmaceuticals for serious diseases and medical conditions. The company’s product portfolio comprises five approved products and multiple clinical and preclinical product candidates.
Over the past decade, BioMarin has become one of the top orphan drug companies, and it looks poised to stay there. BioMarin is expected to post around $875 million in revenue this year and possibly around $1.1 billion next year, following the approval of Vimizim, an enzyme replacement therapy for Morquio syndrome. BioMarin had raised its guidance for Vimizim to $200 million to $220 million from a range of $170 million to $200 million.
BioMarin could have big readouts this year, and many expect continued solid performance from its marketed products. Wall Street analysts, including Jefferies, are eagerly awaiting the Kyndrisa (which is the brand name for drisapersen) FDA panel on November 24. The company also received a favorable ruling from the patent trial and appeals board in the method of use patent application for drisapersen. This may block competition or force royalty payments.
The Jefferies price target for the stock is $166. The consensus target is $159.31. Shares closed on Friday at $107.44.