Danger and reward typically journey hand-in-hand, making the inventory market each profitable and harmful. Among the many greatest exemplars of this axiom are the penny stocks, these equities priced at $5 or much less. With that low worth comes the potential for excessive positive aspects, as even an incrementally small worth enhance will translate to a excessive proportion acquire.
Nevertheless, earlier than leaping proper into an funding in a penny inventory, Wall Road professionals advise trying on the larger image and contemplating different components past simply the value tag. For some names that fall into this class, you actually do get what you pay for, providing little in the best way of long-term development prospects because of weak fundamentals, latest headwinds and even giant excellent share counts.
As the character of those investments makes it troublesome to gauge the power of their long-term development prospects, one efficient inventory deciding on technique is to observe the analysts’ recommendation.
Utilizing TipRanks’ database, we locked in on two penny shares which have garnered glowing evaluations from the Road, sufficient to earn a “Sturdy Purchase” consensus ranking. To not point out every presents huge upside potential. Let’s take a more in-depth look.
Daré Bioscience, Inc. (DARE)
We’ll begin with Daré Biosciences, a scientific stage biopharmaceutical firm targeted solely on points of girls’s reproductive well being. The corporate’s analysis program includes a portfolio of packages devoted to bettering contraception, fertility, vaginal well being, and sexual perform. Along with this pipeline, the corporate has one permitted drug, Xaciato, a clindamycin phosphate vaginal gel for the remedy of bacterial vaginosis.
Xaciato introduced Daré its first income, with a $10 million money cost from Organon in 3Q22, pursuant to the 2 companies’ license settlement. The 2 corporations are working to coordinate the launch of Xaciato this 12 months.
On the pipeline facet, Daré has seen a number of latest optimistic developments. In November of final 12 months, the corporate introduced optimistic topline outcomes from the DARE-VVA1 Part 1/2 scientific research of tamoxifen, a proprietary drug formulation designed for vaginal utility to deal with vulvar and vaginal atrophy in sufferers with ER/PR+ breast most cancers. The corporate plans to report the leads to a peer-reviewed publication.
In a second Part 1/2 research, DARE-HRT1, the corporate reported optimistic pharmacokinetic outcomes earlier this month. This research focuses on a month-to-month intravaginal ring to ship estrogen and progestogen hormones for the remedy of vasomotor signs attributable to menopause. Primarily based on this profitable trial, the corporate plans to advance to a Part 3 efficacy trial.
On the contraceptive observe, Daré has acquired FDA approval of an IDE utility for a pivotal research of Ovaprene, a hormone-free month-to-month intravaginal contraceptive gadget. This approval clears the best way for a Part 3 scientific trial, which is focused for initiation in the course of this 12 months. Daré is engaged on Ovaprene together with Bayer, and the drug candidate has potential to turn into the primary month-to-month dosed intravaginal contraceptive in the marketplace.
Primarily based on doubtlessly important catalysts in addition to its $1.15 share worth, a number of members of the Road assume that now could be the precise time to drag the set off.
Among the many DARE bulls is Jones Buying and selling analyst Catherine Novack, who writes, “We see Daré as an undervalued participant within the girls’s well being house, and are bullish on the identify as a result of: 1) Contraception is a blockbuster indication, and Daré’s Ovaprene will doubtlessly be the one month-to-month non-hormonal choice in the marketplace; 2) Daré’s portfolio property are approvable by way of the 505(b)(2) pathway, de-risking regulatory approval; 3) Business partnerships with large gamers within the girls’s well being house (Organon and Bayer) remove the necessity for a gross sales staff and supply non-dilutive sources of funding; and 4) Enticing threat/profit profile of pipeline merchandise for sexual dysfunction, vulvovaginal atrophy, and being pregnant upkeep.”
Novack backs up her bullish stance with a Purchase ranking on the inventory, whereas her $6 worth goal suggests a whopping upside potential of 422%. (To observe Novack’s observe report, click here)
The Road is clearly optimistic on this penny inventory, as all 5 latest analyst evaluations are optimistic – for a unanimous Sturdy Purchase consensus ranking. With a median worth goal of $5, the upside potential is available in at ~335%. (See DARE stock forecast on TipRanks)
Xilio Therapeutics, Inc. (XLO)
Subsequent up is Xilio, a biotech agency engaged on superior, next-generation immunotherapies for the remedy of most cancers. Particularly, the corporate develops drug candidates with potential to enhance affected person consequence by focusing the immune system’s exercise immediately and selectively to the location of the tumor. Xilio has a proprietary improvement platform and is constructing novel, tumor-activated molecules for optimum impact within the tumor microenvironment. The corporate’s three lively scientific trial packages are all at early phases – however have been displaying promising outcomes.
The primary trial, an ongoing Part 1 research of XTX202, is testing the tumor-activated in opposition to interleukin-2, or IL-2, as a remedy for superior stable tumors. The research has efficiently reached the goal dose vary, and confirmed preliminary proof of elevated CD8+ effector T cells and NK cells. Xilio plan to begin enrollment in a Part 2 monotherapy research throughout 1H23, and to report preliminary knowledge on security and anti-tumor exercise from the Part 1/2 trial in 3Q23.
On the second trial, of XTX301, a tumor-activated IL-12 drug candidate, the corporate has acquired FDA clearance of the IND utility to conduct an lively scientific research. Xilio plans to provoke affected person dosing in a Part 1 scientific trial throughout this quarter and expects to report preliminary knowledge from the Part 1 trial throughout 4Q23.
The ultimate scientific research focuses on XTX101, a tumor-activated anti-CTLA-4. This drug candidate is a part of the corporate’s cytokine program. Xilio has this drug candidate in a Part 1 trial in opposition to superior stable tumors, and is at the moment looking for a accomplice in an effort to conduct additional testing.
In a assessment of Xilio for Chardan, analyst Matthew Barcus writes: “We see sturdy potential with the corporate’s two lead cytokine packages XTX202 and XTX301… We at the moment mannequin XLO’s property attaining $320 mm in projected risk-adjusted 2030 gross sales. We consider XLO is well-positioned to turn into a pacesetter within the area of immuno-oncology and we stay up for a number of key catalysts in 2023 from the corporate’s packages.
Wanting ahead, Barcus charges XLO shares a Purchase, and his worth goal of $7 implies that the inventory has a 12-month upside potential of 143%. (To observe Barcus’ observe report, click here)
That’s a bullish take – however the Road is much more optimistic. XLO has a Sturdy Purchase consensus primarily based on 4 unanimously optimistic analyst evaluations, and the common worth goal of $12.25 suggests a one-year acquire of ~326% from the present share worth of $2.88. (See XLO stock forecast at TipRanks)
To seek out good concepts for penny shares buying and selling at enticing valuations, go to TipRanks’ Best Stocks to Buy, a software that unites all of TipRanks’ fairness insights.
Disclaimer: The opinions expressed on this article are solely these of the featured analysts. The content material is meant for use for informational functions solely. It is vitally vital to do your individual evaluation earlier than making any funding.