2020 just kicked off, but investors aren’t wasting any time. Rolling up their sleeves and getting straight down to business, they know the race is on to find the stocks ready to speed past the rest in the year ahead. To spot these investment opportunities, Wall Street pros recommend taking a step back and focusing on the bigger picture, telling investors to pay close attention to both upside potential and what the analyst community has to say.
With this strategy in mind, what’s the next step? For us, it was to take advantage of TipRanks’ investing tools. The platform’s Stock Screener tool let us filter our search results by analyst consensus, price target upside and Smart Score (TipRanks’ numerical score made up of 8 metrics to measure the strength of an investment).
As a result, we were able to pinpoint 3 stocks flagged by the Street’s analysts as potential winners, with each boasting a “Strong Buy” consensus rating. Not to mention each has a top Smart Score, at least an 8 out of 10. Here’s the scoop.
BioMarin Pharmaceutical (BMRN)
With seven products currently on the market as well as an impressive development pipeline, BioMarin has cemented its status as a biopharma heavyweight. While 2019 saw the company falter, this could be BMRN’s year according to some members of the Street.
Part of the excitement surrounding the company is based on the recent positive Phase 3 study data for its vosoritide therapy in achondroplasia, a disorder characterized by dwarfism, which was announced on December 16. During the study, the drug was able to meet the primary endpoint for growth velocity after one year, with it demonstrating an increase of 1.6 cm/year compared to the placebo. On top of this, vosoritide was generally well tolerated and the results were consistent across the study.
According to Cantor analyst Eliana Merle, the news puts BMRN in a solid position going into 2020, noting, “We think this sets up for 2020-2021 to be a key inflection for BMRN with two regulatory submissions/potential product launches between vosoritide and valrox (hemophilia A gene therapy).”
Should the drug receive approval, Merle estimates about $700 million in peak unadjusted sales. While pointing out that the question of reimbursement has been raised, she argues that the “clean data, coupled with the building body of evidence from long-term Ph2 data and younger patient studies will help support reimbursement discussions.” Bearing this in mind, the analyst left the Overweight rating and $129 price target unchanged. (To watch Merle’s track record, click here)
Like Merle, Wedbush’s Liana Moussatos sees vosoritide approval as very likely. However, she attached a more aggressive price target along with her Outperform rating. Lifting the target by $1 to $158, the analyst thinks an 88% twelve-month gain could be in the cards. (To watch Moussatos’ track record, click here)
In general, the rest of the Street appears to echo the analysts’ sentiment. With 13 Buys and 3 Holds assigned in the last three months, the verdict is that BMRN is a Strong Buy. Based on the $111.71 average price target, the upside potential lands at 33%, with the stock also sporting an 8 Smart Score. (See BioMarin stock analysis on TipRanks)
GoDaddy Inc. (GDDY)
GoDaddy provides an all-in-one solution with everything customers need to design the perfect website, from domains to hosting and online marketing. On the heels of its solid Q3 performance, some analysts are placing their bets on GDDY.
During the quarter, the company impressed with its $851 million in gross bookings, surpassing the $828.7 million consensus estimate. Not only did the figure beat the estimate, but growth accelerated 180 basis points from the second quarter. Adding to the good news, its customer count increased by 140,000 sequentially and 4.6% year-over-year to reach 19.1 million. While uFCF came in below the estimate, one analyst tells investors that he remains fully onboard.
Piper Jaffray’s Michael Olson cites GDDY’s “long-term growth and sticky revenue, along with opportunities for up/cross-selling and M&A” as putting it on the path to success. To this end, the five-star analyst decided to stay with the bulls, keeping the rating as Overweight along with a $91 price target, which leaves room for possible upside of 32%. (To watch Olson’s track record, click here)
Meanwhile, Brent Thill of Jeffries cites his meeting with new CEO Aman Bhutani as the reason for his optimism. Calling the company one of his favorite mid-cap names, the analyst believes Bhutani’s “strong product background should help GDDY become a more comprehensive software provider with higher ARPU.” Additionally, he notes that the CEO won’t sacrifice margins even as the speed of product innovations accelerates. Following the meeting, Thill reiterated the Buy recommendation and $95 price target, implying 38% upside potential. (To watch Thill’s track record, click here)
Looking at the consensus breakdown, it’s clear that the broader analyst community is on the same page. Out of 8 total analysts covering the stock, 100% were bullish, making the consensus a unanimous Strong Buy. If that wasn’t enough, GDDY boasts an 8 Smart Score and upside potential of 31% thanks to the $89.86 average price target. (See GoDaddy stock analysis on TipRanks)
Mimecast Ltd. (MIME)
In an age in which cyberattacks have become a very real and prevalent threat, Mimecast wants to protect customers by offering email security and compliance solutions through its integrated cloud-based platform. Following a strong 2019 performance, one analyst believes an encore could be in store.
Berenberg Bank’s Joshua Tilton is singing MIME’s praises because of its “consistent execution and best-in-class product.” He argues that the company has been able to produce consistent results as its customer count grew by 800 new logos and its net retention rate stayed at 110%. In addition, he sees its new strategy as a key point of strength.
“We believe the new security 3.0 strategy, with its zone-based approach, will help new mid-to-large organizations adopt more products faster. Current ARPU stands at $37. If this new approach can drive increased adoption of IEP, Awareness Training, and Web Security, we estimate the TAM will double for each of these new customers,” Tilton noted.
MIME’s progress with regards to its enterprise segment also plays into the analyst’s bullish thesis. During its most recent quarter, 30 transactions were above six figures and average order value rose to 11,700, up 14% year-over-year. Tilton added, “Supported by a technologically superior offering, we expect MIME to continue its penetration of the enterprise base as management reallocates resources from the lower end of the market.”
It’s no surprise, then, that Tilton reiterated the Buy rating and $59 price target. At this target, shares could climb 32% higher in the coming twelve months. (To watch Tilton’s track record, click here)
What does the rest of the Street have to say? As it turns out, other analysts are in agreement. 7 Buys and a single Hold add up to a Strong Buy consensus rating. The $56.43 average price target puts the upside potential just below Tilton’s forecast at 26%. However, it should be noted that MIME earns a perfect 10 Smart Score. (See Mimecast stock analysis on TipRanks)