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About the Author TipRanks

TipRanks is the most comprehensive dataset of analysts, hedge fund managers, financial bloggers, and corporate insiders. We provide answers to the most basic questions: are they reliable and accurate? What is their track record? Are there better opinions out there? And, the most importantly- should I listen to this particular person? TipRanks stops the guessing game and shows you an updated and accurate view so you can make the most educated investment decisions. TipRanks has become the go-to tool for part-time to professional investors and everyone in the financial world.

Are These Two Healthcare Stocks Great Bargains? Analysts Say Yes


By Harriet Lefton

You don’t need to spend big to pick up premium stock picks… not when you can use the markets’ current volatility to make some savvy investments in cheap stocks.

The two healthcare stocks I outline below each appears seriously undervalued. Don’t just take my word for it — using TipRanks data, I made sure that all these cheap stocks have a ‘Strong Buy’ analyst consensus rating. They also have monster upside potential from their current share price to average analyst price target.

As this is only based on ratings from the last three months, you can get a pretty good idea of each company’s outlook for the rest of 2018.

This is because, at the end of the day, the market is still primed to move higher. Take the recent report from Tony Dwyer, chief market strategist at Canaccord as an example. Dwyer has just boosted his fiscal 2018 S&P 500 operating earnings forecasts to $160 a share from $155 previously.

“I’m really having a hard time thinking that that’s going to be too high” Dwyer told CNBC. He explained: “There’s only one thing that really drives the market … You only have to figure out which direction that earnings are going.”

So with this bullish analysis in mind, let’s take a closer look at TherapeuticsMD (NYSE:TXMD) and Verastem (NASDAQ:VSTM).

Oppenheimer Is Incredibly Bullish on TherapeuticsMD

TherapeuticsMD  is a unique, innovative healthcare company focused on female healthcare. It is on the cusp of big things with its newly-approved drug Imvexxy. This is a treatment for moderate-to-severe pain due to menopause. However, the current share price doesn’t reflect this.

Oppenheimer’s Jay Olson is very impressed by TXMD’s “compelling launch plan.” He has just reiterated his buy rating with a $12 price target- indicating substantial upside potential of 67%. “The innovative launch plan leverages what we consider Imvexxy’s best-in-class profile based on safety, efficacy and convenience” writes Olson.

According to guidelines, patients should begin treatment at the lowest available dose, meaning that Imvexxy should now become the first-line treatment of choice for most dyspareunia cases. Olson believes that TXMD has the capabilities in place to bring this vision into reality. Plus the high dissatisfaction with current treatments means Imvexxy should experience a speedy uptake.

Olson concludes:

“We see TXMD as an underappreciated asset, and our Outperform rating is based on the potential for the company to successfully penetrate and expand the market for treatment of menopausal symptoms with two unique, wholly owned products (TX-004HR and TX-001HR) while an existing prenatal supplement business provides a commercial foundation.”

The Street shares this bullish take on TXMD stock. In the last three months, TXMD has received five consecutive buy ratings. Meanwhile, its average analyst price target of $16.80 suggests 144% upside potential from current levels.

FBR Sees Over 180% Upside for Verastem Stock

“Strong Buy” biotech Verastem wants to improve outcomes for patients with cancer. The company is on a roll : it has just announced positive data for its two lead assets, Duvelisib for chronic lymphatic leukemia and Defactinib; and entered into a lucrative partnering agreement in Japan. This is an exclusive licensing agreement for Duvelisib with Japan’s Yakult. VSTM will receive $10M upfront, $90M on certain milestones, and potentially double-digit royalties on future Duvelisib sales in Japan.

“Duvelisib is differentiated and provides potentially improved quality of care in patients with relapsed or refractory hematologic cancers” cheers B.Riley FBR’s George Zavoico. He has a very bullish price target on the stock of $17 (182% upside potential). The drug sets itself apart from “alternative treatment options based on its efficacy, safety profile and ability to elicit responses in patients intolerant to earlier lines of therapy.”

As for timelines, Verastem plans to launch Duvelisib in US in 4Q18. This is only if FDA approval is granted on or before Oct. 5 PDUFA date. The PDUFA date is the deadline for the FDA to approve or reject the drug. So keep an eye out because an approval (especially before the PDUFA date) could be a major catalyst for the stock.

In total, Verastem has scored five consecutive buy ratings in the last three months. These ratings come with an average price target of $14.60 (147% upside potential).

 

Disclaimer: The author has no position or business relationship in any stock or company mentioned in this article. The author is not receiving compensation for this article. This article is intended for informational and entertainment use only, and should not be construed as professional investment advice.