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Goldman Sachs Predicts Up to 108% Rise for These Two ‘Strong Buy’ Stocks
Given the S&P 500With the recent rise of 5,300 exceeding some experts’ year-end targets, is it wise for investors to be concerned about a potential overheating in the market?
Goldman Sachs chief U.S. equity strategist David Kostin believes that now that the S&P has surpassed the 5,200 target he had forecast, there simply isn’t much more room at the top this year. Kostin believes the current combination of high stock valuations and low projections for GDP and earnings growth in 2024 will likely limit stock gains. “The base case is actually that the market will trade around this multiple level or actually at an even lower multiple as we get to the end of the year,” says Kostin.
But don’t panic; This does not mean that investors should abandon hope in the stock market. Despite Kostin’s flat forecast, Goldman Sachs analysts are pounding the table on two stocks, arguing they are well-positioned to deliver sizable returns next year — in one case, up to 108%.
We use the Tips classification database to take a closer look at these two Goldman picks; each has a ‘Strong Buy’ Street rating and plenty of reasons to attract investors. Here are the details.
Fulcrum Therapy (FULC)
The first stock we’ll look at is Fulcrum Therapeutics, a Goldman pick in the field of biopharmaceutical research. Fulcrum is focused on developing novel therapeutic agents for genetically defined diseases with severe symptoms and large unmet medical needs. This is a potentially rich field, as current therapies have already proven ineffective or insufficient; A company that can successfully create an effective treatment in this area will have a dramatic impact on patients’ lives.
Fulcrum’s approach is based on the underlying genetics of the disease. The company has a proprietary product development platform called FulcrumSeek and used to identify targets for drug candidates. Targets can be used to modulate gene expression, alleviating symptoms and modifying the course of the disease by treating the known causes of gene misexpression.
The company has two drug candidate programs underway that are in the clinical stage, losmapimod and pociredir. The first of these, a new compound under investigation for the treatment of facioscapulohumeral muscular dystrophy (FSHD), is the most advanced.
Losmapimod is currently the subject of the Phase 3 REACH trial, and Fulcrum reports that the drug continues to show progress. There are 260 patients enrolled in North America and Europe, and topline data is expected to be released by the end of this year. Early data from the Phase 2 ReDUX4 study showed that losmapimod demonstrated improvements in functional, structural and patient-reported outcomes.
The story continues
In another development that should be of interest to investors, Fulcrum recently entered into a collaboration and licensing agreement with Sanofi for the continued development and commercialization of losmapimod. Sanofi will pay $80 million upfront in exchange for exclusive commercialization rights outside the U.S., and Fulcrum will also receive up to $975 million in regulatory and sales-based payments and royalties going forward. The two companies also agreed to equally share the overall costs of developing the drug.
On the pociredir pathway, Fulcrum is currently conducting a Phase 1b clinical trial and has activated dosing cohorts 3 and 4. This drug is a potential treatment for hemoglobinopathies, including sickle cell disease (SCD), and the Phase 1b trial is evaluating the medicine in the treatment of FD. Each dosing cohort in this study includes 10 patients.
For Corinne Johnson, an analyst at Goldman, the key point of this company is the losmapimod development program. The drug is in an advanced stage of clinical testing and Johnson sees a lot of potential in its development. She writes: “We are confident about the 4Q24 topline data for the Ph3 REACH study of losmapimod in facioscapulohumeral muscular dystrophy (FSHD) based on multiple factors. First, losmapimod showed positive clinical data on the reachable workspace (RWS) of the primary endpoint of the Ph3 REACH study in the previous Ph2b study ReDUX4 (including the open-label extension) with a significant correlation with muscle fat infiltration (MFI) and alignment with the patient-reported outcomes (PROs). Together, these data provide a concordance of evidence of clinical benefit with the active ingredient, which we consider as risk reduction. Second, our conversations with KOLs showed support for losmapimod in FSHD with the potential for robust patient adherence of the drug following approval. Lastly, losmapimod has a significant lead in clinical development over competitors, making it a first-in-class agent in FSHD.”
This bullish long-term outlook on the flagship product leads Johnson to rate the stock a Buy, and she complements this with a $15 price target that suggests robust upside of ~108% for the next 12 months. (To watch Johnson’s track record, Click here)
Overall, it is clear that the Street agrees with the optimistic view of this issue. FULC stock bases its Strong Buy consensus rating on 9 reviews, including 8 Buys versus just 1 Sells. The stock is currently trading for $7.21, and its $17 average price target implies a one-year upside of approximately 136%. (To see FULC Stock Forecast)
Marex Group (MRX)
Next on our list is a financial services company. Marex Group is a global brokerage that provides a combination of market access, liquidity and infrastructure services to a client base in the energy, commodities and financial markets communities. The company has more than 4,000 global clients, including commodity producers and consumers, as well as asset managers and major banks. Marex operates mainly in Europe and the USA, but is expanding its activities in the Middle East and the Asia-Pacific region.
The company has five main business segments: Clearing, Agency and Execution, Market Making, Solutions and Corporate. The largest of them is Agency & Execution, which represents 46% of the company’s annual revenue. Among its other activities, this segment provides liquidity and matches buyers and sellers across various securities markets. The Clearing segment, which generates 28% of revenue, manages the company’s Future Commission Merchant business. Last year, MRX was one of the top 10 FCM companies in the US.
Marex operates from 35 offices worldwide through a group of branded subsidiary companies. Marex Group, as the parent company, entered the public trading markets through an IPO in April this year, with shares hitting the market at US$19 per share and 3.846 million shares placed on the market by the company. The IPO, which included a large portion of shares sold privately, raised approximately $292 million.
On May 16, after the dust from the IPO had settled, Marex released its financial results for 2023. The company generated $1.245 billion in revenue for the year, a 75% increase over 2022. The company’s annual profit, Before taxes, it was $197 million. .
Goldman 5-star analyst Alexander Blostein is bullish on these new shares, writing in his initiation note: “We expect MRX to deliver ~20% average EPS growth through 2026, driven by healthy volumes.” of the industry, increasing market share gains and expanding margins as the company grows. Under our assumptions, MRX is expected to see revenue growth of approximately 13% through 2026 as the company continues to gain share in markets and regions in which it did not previously compete (i.e. Prime Brokerage Services through the acquisition from Cowen, fixed income swaps clearing in LCH and APAC expansion), with additional near-term tailwinds from higher rates and volatility. As the business grows, we see operating margins of 18%/19%/20% as of 25/2024/26.”
Looking ahead, Blostein justifies an optimistic price target by noting MRX’s growth potential, saying, “At ~8X 2024 P/E, MRX is at a significant discount to the ~10X average P/E of its peers in 2024, which we think is not guaranteed given the company’s more diversified product set across products and geographies, superior revenue growth and higher ROE.”
Consequently, the analyst rates MRX shares a Buy, combined with a $33 price target, implying 61% upside potential over a one-year horizon. (To watch Blostein’s track record, Click here)
So far, all 7 Marex stock reviews are positive, making the Strong Buy consensus rating unanimous. Shares are now trading for $20.50, and the $26.29 average price target suggests MRX will gain 28% over the next year. (To see MRX Stock Forecast)
To find good ideas for stock trading at attractive valuations, visit TipRanks’ Best stocks to buya tool that brings together all of TipRanks’ equity insights.
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.