Billionaire Steve Cohen is going big with these 2 “Strong Buy” stocks

2022 will undoubtedly be a rough one for investors. Even taking into account the recent gains, all the major indices are still down for the year and economic uncertainty is still looming.

Such an environment makes it difficult to find stocks ready to charge ahead, but one way to sort the wheat from the chaff is to follow in the footsteps of legendary stock pickers.

And few people are as skilled in the investment game as billionaire Steve Cohen. Known for his high-risk, high-value trading style, hedge fund manager firm Point72 has $25 billion in assets under management, and Cohen’s net worth is estimated at around $16 billion.

So when Cohen makes some moves, it’s natural for investors to pay attention. Recently, Cohen has been loading up on two names, and we delved into the TipRanks database to get the lowdown on these tickers. It seems Cohen isn’t the only one who thinks these stocks are worth a punt. According to analyst consensus, both are also rated as Strong Buys. So, let’s see what makes these names attractive investment options right now.

Exact sciences (EXAS)

The first Cohen pick we’re looking at is Exact Sciences, a molecular diagnostics specialist focused on cancer prevention, whose tools help detect cancer in its early stages.

The company’s initial product was the colon cancer test, Cologuard, launched in 2014 as the first stool DNA test for colorectal cancer. Originally focused on the early detection and prevention of colorectal cancer, Exact Sciences has expanded its product line to include additional oncological screening and precision testing for many types of cancer.

The company’s latest quarterly report was a win and a promotion. Net income of $523.07 million was delivered, representing a 15% year-over-year increase and exceeding the consensus estimate of $19.95 million. Likewise, on the bottom line, EPS hit -$0.84, besting the Street’s forecast for -$1.07. And for the prospect, due to the solid beat of the quarter, the company raised its revenue guidance for the full year 2022 from $1.980-2.022 billion to $2.025-2.042 billion.

It’s no surprise, then, that an investor like Steve Cohen would be interested in a company like Exact Sciences. In Q3, Cohen’s Point72 made a significant purchase in EXAS shares, amounting to 2.43 million shares, worth over $104 million at the current share price.

Canaccord analyst Kyle Mikson sees plenty of reasons for a positive outlook here. He writes, “Regardless of the path the colorectal cancer screening market takes over the next few years, we remain of the view that Exact’s Cologuard business should be a strong and consistent growth asset over time. We are also very bullish on Exact’s long-term growth potential given its many pipeline assets, progress towards profitability (not pursuing dilutive options) and performance. We believe the company is on track to execute its core long-term growth strategy.”

Accordingly, Mikson rates EXAS shares Buy, supported by a price target of $70. There is plenty of upside – 63% to be exact – should the target be met in the next 12 months. (To view Mikson’s track record, Click here)

In total, 12 analysts have offered their opinions on Precise and these are broken down into 9 Leads and 3 Holds, giving the stock a strong consensus rating of Buy. At 57.67, the average target suggests shares will deliver returns of ~35% in the coming months. (See EXAS stock forecast on TipRanks)

Horizon Therapeutics (HZNP)

The next Cohen-endorsed name is Horizon Therapeutics, a biopharmaceutical company focused on bringing drugs to market for rare, autoimmune and severe inflammatory diseases. Horizon has a deep and diverse drug portfolio including thyroid eye disease (TED) therapy Tepezza, gout medication Krystexxa, and urea cycle disorder treatment Ravicti, among others.

They all add to the revenue draw with Tepezza leading the way. Although sales of the drug fell 20% year-over-year to $491 million in Q3, the figure represented a 2% sequential increase and eased fears of a larger withdrawal. In fact, while total revenue fell 10% from the same period a year ago to $925.4 million, the figure beat the Street’s forecast by $37.76 million. There was also a hit on the baseline, with adj. EPS of $1.25 coming in well ahead of the $1.01 expected on Wall Street.

Even better, the company delivered with its attitude; full-year sales guidance was increased from $3.59 billion to $3.61 billion (consensus was $3.56 billion).

Apart from its product portfolio, the company has a bulging pipeline which received a big boost from the acquisition of Viela Bio last year. The $3 billion deal helped the company not only get its hands on lead candidate Viela Uplizna, which is approved to treat neuromyelitis optica spectrum disorder (“NMOSD”) in the US, but also bolstered the pipeline with three assets that indicated for the treatment of autoimmune diseases. such as systemic lupus erythematosus (SLE), sjögren’s syndrome and rheumatoid arthritis.

Cohen clearly thinks the company is making the right moves. In Q3, he opened a new position and bought 2,094,400 shares. These are now worth over $157 million.

Looking ahead, Wells Fargo analyst Derek Archila suggests that next year has plenty of upside: “We think 2023 will be a big year for the HZNP pipeline, which we believe is undervalued and should be she upside down for shares. There are a number of clinical catalysts that we think could help re-rate HZNP shares and encourage investors to assign greater terminal value that is not in the stock at these levels.”

Explaining the above, Archila added, “Tepezza’s chronic low CAS/TED trial will be read out in 2Q23, which is important to increase its use in a much larger set of TED pts than high CAS/active . Furthermore, we are most interested in the SLE Ph2 trial of daxdilimab in 2H23, which is de-risked by BIIB059 and its Ph2a trial in alopecia areata in 2023. We think this could be a ‘pipeline in product’ given there. many autoimmune conditions are associated with Type I IFN. Also, data from dazodalibep in Sjogren’s from several populations will be reported in 1H23.”

Given all of the above, Archila has high hopes. Along with an Overweight (ie, Buy) rating, he set a $118 price target on the stock. This target puts the upside potential at 57%. (To view Archila’s track record, Click here)

Overall, most of Archila’s colleagues returned their bullish position. Based on 9 Purchases vs. 2 Holding, the analyst consensus rates the stock as a Strong Buy. The forecast calls for one-year gains of ~30%, given that the average target is $97.45. (See HZNP stock forecast on TipRanks)

For great ideas on trading stocks at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unifies all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the analyst in question. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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