While August brought back the strength of the market this year, the past few sessions have seen a resurgence.
The good news, according to Andrew Slimon, managing director and senior portfolio manager at Morgan Stanley Investment Management, is that the market’s uptrend is set to continue.
The updated Slimmon S&P 500 during Q3 earnings will see it approach the 5,000 mark by the end of the year, not only an 11% increase from current levels, but also a new record, beating the 4,818 set in early 2022.
“Year-over-year quarterly earnings will turn from negative to positive after Q3,” Slimmon said. “Historically, this will be greeted with a positive, fair-mindedness.”
Meanwhile, stock experts at Morgan Stanley also have an idea of which stocks will do well against this positive backdrop. They’re pointing to a pair of stocks that investors see meaningfully outperforming — both of which see returns of at least 60% in the coming months.
To find out what the rest of the street class thinks of these names, check out these tickers TipRanks database – A platform to track and measure the performance of anyone providing online financial advice. Here’s what we got.
Despegar.com Corporation (Cracking)
To begin, we look at one of Latin America’s most experienced travel agencies. Despegar.com is known throughout the region, and recommended by many travelers. The company operates in 20 countries and offers a full range of travel services and products, including airline tickets, travel packages, hotels, vacation rentals and more. Despegar has served more than 17 million customers as a one-stop marketplace for vacation planning for every traveler.
Some numbers show the scale at which Despegar works. The company can connect travelers with more than 800 airlines, 1260 car rental agencies, 7,700 leisure activities and 660,000 accommodations in Latin America. The services are offered under two brands, Despegar, the flagship brand, and Decolar in Brazil.
Earlier this month, Despegar reported its 2Q23 numbers, and despite the current weak quarter, it reported record revenue of $165.5 million, a 23.1% year-over-year increase, beating expectations by $6.73 million. Likewise, EPS of $0.25 came in 1 cent ahead of estimates. Additionally, as travel demand continues to recover in Latin America, the company posted gross bookings of $1.3 billion in the quarter. Looking ahead, Despegar reiterated that it expects 2023 revenue of $640 million to $700 million, compared to the consensus of $669.48 million.
With Morgan Stanley’s case for further growth here and charting a strong path for investors to follow, analyst Andrew Reuben has good things to say about the stock. He wrote, “We see cyclical, secular and company-specific drivers supporting earnings growth for Despegar… We look for Despegar to grow revenue at +25% y/y in 2023E and at +12% 2022-2027E CAGR… We look for Despegar. It has room to gain share – as a pure play in the LatAm market, benefiting from network effects in a region with high hotel and airline dividends. Despegar ranked highly in our channel analysis of the top 15 Brazil/Mexico travel platforms, including fees, ease of use, recommendations and personalization tools.
These comments inform Reuben’s Overweight (i.e. Buy) rating on the stock, while his $13 price target represents a 63% 12-month gain. (To see Ruben’s track history, Click here)
Overall, this stock has only received 2 recent analyst reviews, though both were positive, giving it a moderate Buy consensus rating. An average price target of $12 and a trading price of $7.95 together suggest ~51% one-year upside potential. (look out DESP stock forecast)
Farvaris NV (PHVS)
From the travel industry, we switch gears and move into biopharmaceuticals. Farvaris is a clinical-stage biopharma company working on new treatments for hereditary angioderma (HAE), a severe skin disease characterized by severe inflammation. The company’s focus is on bradykinin B2-receptor antagonists, a novel drug class, orally administered, for the prevention and treatment of HAE attacks.
Farvaris is developing a diuretic, a new small molecule therapeutic agent it is studying as a safe, effective and convenient treatment for all subtypes of HAE. Farvaris is developing the drug as a prophylactic treatment and as an on-demand treatment to relieve symptoms of acute illness.
Farvaris currently has a number of pipeline research paths to DeCritibant. The two most in immediate demand are the PHVS416 and the PHVS719.
The first of these, -416, was the subject of clinical management by the FDA until recently. This was partially lifted last June, following a pre-planned interim analysis of an ongoing 26-week non-clinical study. The hold was raised on the IND (Investigational New Drug) application for the drug on demand for the treatment of HAI attacks.
The company’s IND is pending an additional hold from the FDA for -416, a prophylactic treatment for HA, but the company expects to submit additional data by the end of the year, with the goal of getting the hold lifted. Although this case affects the phase-1 phase 2 study in the US, the study is a global clinical trial – and continues outside the US. The company announced that it has completed its CHAPTER-1 registration earlier this month. The company expects to report top-line data from the CHAPTER-1 study by the end of 2023.
Also of note is the PHVS719. This is an extended release capsule, to be taken once a day and used as a preventive treatment for HAE. The drug is currently undergoing phase 1 trials in healthy volunteers, to determine the safety and tolerability profile of the drug formulation.
This caught the eye of biopharma researcher Morgan Stanley Maxwell Schoon. The analyst noted that the company’s lead product continues to show a healthy safety profile and wrote of the stock, “We believe Farvaris is positioned to provide the first oral therapy for the treatment of hereditary angioedema (HAE) with a positive Ph2, following RAPIDE-1 data and the FDA withdrawing their clinical plan.” The decision to lift the clinical hold for the treatment of interest reflects growing confidence in the safety profile and alignment of ducritibant in the requested non-clinical study design. We see a viable market opportunity for on-demand, short-term prophylactic treatment while building confidence in the risk-adjusted approach (MoA) and trial design of the Ph2 CHAPTER-1 Prophylactic Readout (YE23).
Looking ahead, Skor maintains an Overweight (Buy) rating on Farvaris shares, with a price target of $34, indicating the stock could gain ~66% over a one-year horizon.
Overall, PHVS picked up 3 recent analyst ratings, which are 2 Buy and 1 Sell – with a consensus outlook of Medium Buy. An average price target of $22 suggests a 7% upside potential for the next year. (look out Farvaris stock forecast)
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Disclaimer: The opinions expressed in this article are those of the featured analysts only. The content is intended for informational purposes only. It is very important to do your own analysis before making any investment.
