After 7 weeks of straight losses, markets started the long weekend on a high note: their best week since 2020. The S&P 500 added more than 6%, erasing its losses from May.
The sudden drop in value, combined with an even more sudden bullish turn, albeit temporary, has brought out the discount buyers in the equity world. “Buying the dip” is a real thing, and often a successful route to long-term portfolio gains, and the current environment is ripe for this type of trading.
Speaking from RBC Capital, Head of US Equity Strategy Lori Calvasina said, “It’s right at this point to start looking for bargains. If you can make people more comfortable with the fundamental narrative going forward, I think stocks are cheap. enough to buy.”
With that in mind, we scoured the TipRanks database and picked out two names that have recently headed south, specifically those that have been flagged by insiders as oversold. Not to mention that substantial upside potential is on the table here. Let’s take a closer look.
MeiraGTx Holdings (MGTX)
We will start with MeiraGTx Holdings, a clinical-stage biopharmaceutical company focused on developing new gene therapies for serious diseases. MeiraGTx’s research program includes three main areas, including neurodegenerative diseases, severe xerostomia, degenerative eye diseases and/or inherited retinal diseases. Each of these areas can seriously affect a patient’s quality of life, and each has high unmet medical needs, providing an opening for a company capable of creating effective treatments.
MeiraGTx has a diverse and active research pipeline, with 8 preclinical leads and 6 in various stages of clinical trials. The flagship program, AAV-RPGR, is a novel gene therapy designed to treat X-linked retinitis pigmentosa (XLRP), a form of hereditary progressive blindness passed down through maternal lines. AAV-RPGR, also called botaretigene sparoparvovec, is being developed in partnership with Janssen and is currently in the Lumeos Phase 3 clinical trial which is recruiting and dosing patients. MeiraGTx expects to release full data from the previous Phase 1/2 trial later this year.
The company’s second lead candidate is AAV-AQP1, a treatment for xerostomia. It is a condition of the salivary glands, with a variety of potential causes, in which the glands do not produce enough saliva to keep the mouth from drying out. MeiraGTx completed dosing of the unilateral and bilateral cohorts in the Phase 1 trial during 1Q22 and will present study data during Q4. A placebo-controlled Phase 2 trial in the planning stage, with launch expected by the end of this year.
In addition to its strong development programs, MeiraGTx enjoys a steady revenue stream, derived from licensing agreements with partner companies – such as Janssen, mentioned above. In 1Q22, the company recorded $5.6 million in such revenue, up 21% year-over-year. MeiraGTx expects to receive another $13.1 million payment from Janssen during the second quarter.
Nevertheless, the MeiraGTx share price has fallen 65% so far this year. That’s not to say the stock isn’t healthy, according to RBC analyst Luca Issi.
“We believe the JNJ collaboration on multiple ocular indications (XLRP, color blindness, options for others) provides pharmaceutical validation and has been hit by favorable economics with $100 million upfront, up to $340 million and 20% non-tiered royalties Importantly, JNJ funds all clinical costs, so MGTX has a shareholder-friendly burn compared to similarly sized biotechs,” Issi noted.
“Overall, we continue to like the setup given an undemanding evaluation and clinical POC through the eyes, salivary glands and CNS…At this evaluation, we believe the stock is oversold,” the analyst added.
Taking all this into account, Issi rates MGTX as an outperformer (i.e. a buy), while its price target of $27 suggests an impressive 228% year-on-year upside. (To see Issi’s record, Click here)
Wall Street broadly agrees with RBC’s view, as shown by the unanimous Strong Buy consensus rating. The shares are priced at $8.23 and their average target of $29 indicates a 252% upside for the next 12 months. (See MGTX stock forecast on TipRanks)
iSun, Inc. (ISUN)
And now we move on to the energy technology sector, where iSun has been in business for 50 years. The company works in the solar energy niche, providing a range of products for solar energy projects at all scales: residential, commercial, industrial and utility. The company also offers operations and management services and software systems for managing solar power operations. Overall, iSun has generated more than 348 million kilowatt hours of electricity from its solar systems.
iSun has benefited in recent months from the political will to promote alternative, greener energy systems, including solar. The company’s 2021 revenue was $33.3 million, a 60% gain from the $20.8 million reported in 2020. In the first quarter of 2022, iSun reported $15.1 million. dollars in revenue, a 107% gain over 1Q21 earnings, and gross profit was $3.2 million, a dramatic year-over-year improvement over $100,000 reported in the prior year quarter. In a key metric that bodes well for the company’s future, iSun reported a backlog of $128.3 million at the end of 1Q22. Nearly 80% of this backlog comes from the commercial and industrial division of the company.
Despite these strong results, iSun shares are down 47% in 2022. However, Roth Capital analyst Justin Clare sees the current low share price as an opportunity, based on the potential business of iSun. ‘iSun in the future.
“For 2023, we have maintained our revenue and adjusted EBITDA guidance, although we see significant upside potential if panel availability is resolved. With the postponement of the project from 2022 to 2023, it is possible the ISUN could build a significant portion of two projects of around 110MW with a revenue potential of around 1 USD/W, or around 220 million USD in revenue.This could lead to a significant increase in our forecast for 2023, although significant uncertainty remains regarding panel availability in 2023. Overall, given ISUN’s growing backlog and improving margins, we believe stocks are oversold,” said Clare said.
Clare’s comments confirm his Buy rating and his price target of $6.50 implies 104% upside potential over the coming year. (To see Clare’s track record, Click here)
Overall, this alternative energy company garnered the opinions of 2 analysts, both of whom agree that this is a Buy proposition, making the Moderate Buy rating unanimous. ISUN shares are selling for $3.18 and the average target of $8.25 suggests a 159% upside from that level. (See ISUN stock forecast on TipRanks)
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Disclaimer: The views expressed in this article are solely those of the analysts featured. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.