Every investor knows that the way to profit is to buy low and sell high. This is a fundamental imperative of any economic trading system. However, the trick is to recognize when the stock is low enough to buy in. The best moment to buy is when the stock hits rock bottom; this maximizes the return when the stock price rises again.

Wall Street analysts know this and do not shy away from it, Recommend stocks that may have hit their bottom. We identified two such shares. Both have dropped significantly, but have upside potential to justify a buy rating.

Vertex Pharmaceuticals

Vertex LogoVertex Pharmaceuticals, is a biotech company that started in 1989 and Treatments for cystic fibrosis. The company currently has four approved drugs for the treatment of CF on the market and is expected to dominate this segment over the next two decades. Nevertheless, the stock is this year down 20 %.

The latest sell-off took place last Friday, June 11, and coincided with the company’s decision to sell its end clinical study program for VX-864, an active ingredient candidate being investigated for the treatment of alpha-1-antitrypsin (AATD). The decision was taken after the Drug had shown no clear clinical benefit in its Phase 2 trial.

Biotech research programs often fail – it is a high risk of business. More worrying for investors than this individual program is the fact that Vertex has not developed a successful drug program outside its CF treatment line over the years. The concern that the company is a One-trick Pony was the basis of the recent sell-off.

However, within the CF program, Vertex has achieved considerable success. The four approved drugs of the company (trade names Trikafta, Symdeko, Orkambi and Kalydeco) are proven money makers in an established market, and the company recorded a sequential increase in sales in the last 6 quarters. The last quarter, 1Q 21 amounted to $ 1.72 billion, an increase of 14% over the previous year. At $ 2.49, GAAP EPS was 8.7% higher than in the previous year.

Cowen analyst Phil Nadeau writes about Vertex after hiring VX – 864 and acknowledges the program’s failure-but also the company’s fundamental strength.

“The downfall of ‘864 is disappointing, but in a way it’s a ‘good failure’ that moves the program forward. Vertex has a track record of iterating in its pipeline, producing better and better candidates. We are optimistic that Vertex will eventually produce a successful AAT corrector that will increase fAAT levels above the protection threshold, … ” – Phil Nadeau

Nadeau sees that Vertex is “failing” and still rates the stock as outperform. Its price target of $ 300 implies a Upward movement of 59%.

A look at the analyst consensus shows that Nadeau is hardly an outlier at this stock. Of the 24 current reviews are 19 for sale and only 5 to hold, making the consensus view a strong buy. The stock costs $ 188,97, and the average price target of $ 261,68 indicates a one-year upward trend of 38%.

OneConnect-Financial Technology

OneConnect LogoOneConnect is a Fintech operating in China’s digital banking sector. Thus, the company is solidly in the Middle of a huge growth market; Digital banking expanded before Corona, but in the pandemic year all online banking services were greatly expanded. The digital banking market is estimated at $ 8 trillion worldwide – and China, with the largest population in the world and the second largest economy, is able to operate in this area make huge profits. This is the environment in which OneConnect lives.

The company offers Technology-as-a-Service and provides a series of digital banking tools and applications ready on one platform. This makes OneConnect a One-Stop-Shop for digital banking providers, and the company serves almost all major and city banks China as well as more than half of the country’s insurance companies.

Like many expanding technology companies, OneConnect records constant net losses. The company has not yet made a profit – although the EPS loss in the first quarter was 21 cents of 13 cents compared to the previous year’s loss of 17 cents per share was an improvement. Total revenue in the first quarter was $ 126.5 million (820 million Chinese yuan), representing a Year-on-year increase of 52 %.

Despite this, the stock lost 39% of its value this year. Nevertheless, at least one analyst sees the current low share price as a chance to shop.

The BC Analyst Carson Lo gives OCFT a buy rating and sets a price target of $ 20showing room for ~66% upside potential in the coming year.

“The recovery in business activity has increased third – party sales and helped maintain the accelerated growth trajectory over the previous year, and we expect this trend to continue in the coming quarters” – Carson Lo.

Overall, there are only two recent reviews for OneConnect, but both agree that these Share is suitable for purchase, which makes the consensus for moderate purchase unanimous. The share price of $ 12.07 and the average price target of $ 22 together point to a one-year upside potential of 82%.

Last updated on June 16, 2021

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