As the second quarter of 2022 gets into full swing, investors have to navigate through several contradictory currents. Inflation remains stubbornly high, and with the Russo-Ukraine war and renewed Chinese lockdowns, it will get no help on the supply chain front. But March’s jobs numbers were encouraging, indicating that employment has almost returned to its pre-pandemic levels. And the Federal Reserve has begun its policy switch, from easy money to an anti-inflationary tightening stance.
Writing from Oppenheimer, chief investment strategist John Stoltzfus asks the main question: “With the Fed in inflation-fighting mode, the question is not will they hike, but by how much?” So far, after the first bump of 25 basis points, indications are for 4 to 5 more hikes this year, each of 25 to 50 basis points. We should expect the Feds funds rate to reach approximately 2% to 2.5% by year’s end. But probably not much higher, according to Stoltzfus.
“From our perch on the market radar screen it looks to us that the Fed’s efforts to curb inflation in the months and quarters ahead will likely be more akin to pumping the brakes to slow the US economy rather than pulling the emergency brake and risk sending the economy and the markets through the proverbial windshield. Jerome Powell in our view has in no way signaled that he’d care to risk a recession by tightening too hard or too fast,” Stoltzfus wrote.
If that does turn out to be the case, then investors should expect conditions at least somewhat conducive to growth. Meanwhile, the Oppenheimer stock analysts are busy picking out stocks that meet an intriguing profile: they crashed, and crashed hard, when the markets fell in the early part of the year, but still show a latent potential for a rebound.
We’ve used the TipRanks database to pull up the details on three of them which, according to the Oppenheimer views, could soar 100% or more in the coming months. Let’s dig into the details, and get the whole story.
Lightning eMotors (ZEV)
We’ll start in the electric vehicle (EV) sector, where Lightning eMotors has staked out positions in two separate niches. The company approaches EVs through both vehicle drive systems and the electric charging station network. In addition, Lightning eMotors doesn’t try to build whole vehicles; rather, it builds the electric motors and power trains needed to operate existing chassis designs as EVs, and even offers EV conversion packages for existing gasoline vehicles. The company markets its products and services to vehicle manufacturers and fleet operators, especially in the commercial and urban transport niches.
2021 was a difficult year for Lightning eMotors. The supply chain problems cut into the number of available chassis, by limited manufacturers’ ability to produce and deliver them, and Lightning has had difficulty securing enough supply to meet demand for its electric vehicles. The company has worked to meet the challenge by expanding its non-chassis dependent products – vehicle conversions and charging station infrastructure – but both avenues require time. For the present, the company reported 4Q21 revenues below expectations.
The top line came in at $4.2 million for the quarter, up 13% year-over-year but well below the forecast of $5.3 million. The company attributed the miss to delays in chassis deliveries from 3rd party producers, and acknowledged that the delays are likely to continue into the latter half of this year. As a result, in its guidance, Lightning has pushed approximately $7 million in 1Q22 potential revenue into upcoming quarters.
The upshot of all of this is that Lightning’s shares are down significantly, having lost 56% over the last 12 months.
In one indication of the company’s strength, and ability to counter the downward pressure on share prices, Lightning announced last month a partnership with Forest River – the large manufacturer of RVs, commercial vehicles, and urban busses – for the conversion of shuttle busses and delivery vans from gasoline to electric. The partnership will cover over 50,000 FR vehicles across the US. This project builds on existing collaborations between Lightning and Forest River. It also complements Lightning’s existing production backlog, which is currently valued at $169.3 million.
Taking a holistic view of Lightning eMotors, Oppenheimer’s 5-star analyst Colin Rusch sees plenty of potential, writing: “We expect ZEV to the benefit from of its internal chassis ramp specifically because its purpose built design optimizes battery location eliminating weight and assembly complexity. We believe this offering will aid volumes along with cost structure and vehicle performance. We are also encouraged by ZEV’s expanded relationship with Forrest River to offer retrofit buses, which we believe can further aid growth along with its standalone powertrain offering.”
“While revenue ramp has been pushed out due to supply chain headwinds, we believe ZEV is one of the few companies successfully making medium duty vehicles, which we expect it to leverage into a sustainable share position,” the analyst summed up.
Everything that ZEV has going for it convinced Rusch to leave his Outperform (i.e. Buy) rating as is. Along with the call, he keeps the price target at $15, suggesting ~231% upside potential. (To watch Rusch’s track record, click here)
It turns out that other analysts also have high hopes. With 4 Buy ratings, the word on the Street is that this stock, which currently going for $4.36 apiece, is a Strong Buy. In addition, the $11 average price target puts the upside potential at ~152%. (See ZEV stock forecast on TipRanks)
The second stock we’ll look at is a software firm, offering a range of product management and team collaboration tools and apps. Asana’s products are available through mobile and web versions, and are used to manage, organize, and track both individual and collective work projects. The real ‘added value’ here is the system’s applicability to both office and home working environments, a clear advantage for today’s white-collar environment when so many workers are connecting from wide-spread locations.
The quality of the company’s product – and the high demand – can both be discerned in the company’s recent revenues. Asana has released 7 quarterly reports since going public in 2019, and has put up 6 consecutive sequential revenue gains. The last report, for 4Q of fiscal year 2022, showed $111.9 million at the top line, for a year-over-year gain of 64%. Earnings came in at a net loss of 25 cents, in line with the last five quarters.
Asana’s shares peaked this past November, and since then have fallen 74%. A large part of that drop has come recently – the stock dropped 27% of its value just in March of this year. It’s a company with a strong product in high demand, seeing plenty of revenue growth, so the fall in share value raised the question, What gives?
The answer may lie in the forward guidance. Management pointed toward fiscal 1Q23 sales numbers between $114.5 million and $115.5 million, which would represent ~50% y/y growth, a clear slowdown from the published Q4 result. Also, the guided Q1 net loss, at approximately 35.5 cents per share, is significantly deeper than the 26.5 cent net loss that analysts had expected.
In his comments on this stock, Oppenheimer’s Ittai Kidron, a ‘Top 25’ analyst per TipRanks, sees the company’s continued growth as the key factor in the long haul, even with the predicted slowdown. He writes: “Asana’s strong quarter and steady sales execution reinforce our belief that it can successfully drive user growth and enterprise adoption over time. That said, we expect investors to take a cautious view of the aggressive near-term investment. While mindful of near-term volatility, we’re comfortable buying with a long-term focus given the large TAM…”
Based on all of the above, Kidron stays with the bulls, reiterating an Outperform (i.e. Buy) rating and $85 price target. Investors could be pocketing a gain of 133%, should this target be met in the twelve months ahead. (To watch Kidron’s track record, click here)
Asana has decent support amongst Kidron’s colleagues. ASAN’s Moderate Buy consensus rating is based on 8 Buys, 3 Holds and 1 Sell. The stock’s average price target of $57.83 and current trading price of $37.3 combine to give an upside of ~59% for the next 12 months. (See ASAN stock forecast on TipRanks)
We’ll wrap up this list with a preclinical-stage biopharmaceutical company. Immuneering is pursuing a novel approach in cancer treatment, developing new drugs with short half-lives to limit toxicity effects. The drug candidates under development are designed to disrupt the abnormal activation of the MAPK and mTOR signaling pathways that permit tumors to metastasize while evading the patient’s immune system. By creating less toxic therapeutic agents, Immuneering hopes to introduce a new class of anti-cancer drugs useful in broad patient populations.
All of this costs money, and Immuneering moved to raise capital through an IPO last summer. At the end of July, the company put 8.625 million shares on the market at $15 each, raising some $129.4 million gross proceeds from the sale. Since then, IMRX shares saw volatile trading in the late-summer and autumn months, and since the start of this year have fallen 56%.
In its first few months as a public company, Immuneering has moved closer to the clinical trial stage. Its leading drug candidate, IMM-1-104, has shown a broad range of activity against a variety of tumors in preclinical animal studies, and the company expects to file the Investigative New Drug application with the FDA in 3Q22. The second drug candidate, IMM-6-415 is now entering the IND-enabling studies. This second candidate is designed to cause resistant tumors to develop sensitivity to select immunotherapies.
Analyst Mark Breidenbach, in his note for Oppenheimer, sees the start of human trials later this year as the key factor for this company.
“Immuneering’s lead program, a novel MEK inhibitor, has been rationally designed to overcome a key resistance mechanism in cancer cells while minimizing collateral damage to healthy tissues. Preclinical data suggest ‘104 can hold its own against FDA-approved drugs targeting the same pathway, but with potential for cleaner safety and applicability to a much broader patient population. With ‘104 advancing into the clinic this year, we see potential for serious value inflection in the next 12-to-18 months,” Breidenbach opined.
Taking the above into consideration, Breidenbach rates IMRX an Outperform (i.e. Buy), and his $25 price target implies a robust upside of 253% over the coming months. (To watch Breidenbach’s track record, click here)
It’s not only Oppenheimer that takes an upbeat view of this biopharma researcher; all three of the recent analyst reviews here are positive, making the Strong Buy consensus rating unanimous. The stock’s $33.67 average price target suggests a one-year upside of a whopping 379%. (See IMRX stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.