With the first days of summer, we usually see a slowdown on Wall Street as volumes, along with overall investor interest, drops in favor of vacations and summer fun. That may not be the case this year as the Brexit vote is right around the corner, and after that, more consternation over the Federal Reserve and a July rate hike, and, of course, politics. Now is the time to look for good growth stocks as the second half of the year could have solid upside after a flat first half.
This week’s top growth stock ideas from the analysts at Jefferies are dominated by some outstanding biotech and healthcare stocks. While more suited for aggressive growth accounts, the Jefferies team has their eyes on companies that have less binary event risk. We highlight four of this week’s top growth stocks all are rated Buy.
This company was one of the top Jefferies biotech picks for 2016. 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 stock jumped recently when Celgene and Natco came to a patent settlement, which removed a huge overhang on the stock that has been there for some time. Revlimid makes up over 60% of the company’s total revenue, and the analysts note that the company has discussed at its recent conference the benefits of longer duration Revlimid. They also note that Celgene has a very compelling pipeline.
The Jefferies price target for the stock is $140. The Thomson/First Call consensus target is $136.82. The shares closed Tuesday at $96.86.
This stock has been on a total roller-coaster ride over the past year. Medicines Co.’s (NASDAQ: MDCO) goal is to be a leading provider of solutions in three areas: serious infectious disease care, acute cardiovascular care and surgery and perioperative care. The company is focused on saving lives, alleviating suffering and contributing to the economics of health care by focusing on 3,000 leading acute/intensive care hospitals worldwide.
The stock shot up in the fall when the company announced news that an experimental cholesterol drug being co-developed with Alnylam Pharmaceuticals lowered LDL-C or “bad” cholesterol levels by around 83% in a small, early stage study. The drug, ALN-PCSsc, is an injected RNAi therapy designed to block the expression of the enzyme PCSK9, a protein that plays a critical role in regulating circulating levels of bad cholesterol in the blood.
The Jefferies team expects Phase 2 data for MDCO-216 and ALN-PCSsc, as well as Phase 3 data for Carbavance, all this year. Some Wall Street analysts are currently assigning a 60% probability of success to Carbavance, and successful Phase 3 data would take the probability much higher, and could lift the stock $3 to $4 higher.
The $43 Jefferies price target is less than the consensus target of $49.60. The stock closed Tuesday at $33.37.