3 Hot Growth Stocks With Upside Potential That May Not Be Appreciated by Wall Street

Investing

Published: April 7, 2016 10:10 am

Last Updated: January 13, 2020 11:03 am

Sometimes after a stock has a good run, the analysts on Wall Street start to get a little gun-shy, especially if they made a good call on the stock and it went up smartly. Often they will cut the rating a notch, but keep the price target the same, or even move it a touch higher. Then they can have it both ways. They have cut the rating if it goes down, but they raised the price target if it goes higher.

A new Jefferies report focuses on three companies that could have some of the qualities that are matched in this thesis. They also are companies that for one reason or another took a shot as the sector they belong to got hit. All three are rated Buy at Jefferies.

Celgene

This was one of the top biotech picks for 2016 at Jefferies. Celgene Corp. (NASDAQ: CELG) has an outstanding partnered pipeline. which most think is low risk and has the potential to yield several blockbuster drugs. Certain Wall Street analysts also think the company can grow earnings 15% on a compounded annual growth rate basis going forward.

Otezla, which treats psoriasis and psoriatic arthritis, had achieved considerable prescriptions among physicians but the scripts have slowed after a solid launch, showing the importance for sales outside of the United States. Celgene’s blockbuster blood cancer drug Revlimid continues to dominate. Pomalyst sales also continue to be solid. Cancer drug Abraxane is also growing at a respectable rate, so the company continues to have a strong lineup of top-selling drugs.

The company recently reported fourth-quarter financial results that showed year-over-year growth on the top and bottom lines but came in short of Wall Street’s consensus forecast. It is worth noting that the net negative impact of currency on net product sales was 1%.