It has become mainstream to predict a recession this year. The Federal Reserve is on track to steadily raise interest rates — the most recent being a 25 basis point hike announced today — to combat inflation, and the central bank has indicated it will maintain this route until inflation actually subsides. By definition, that would involve raising the cost of capital to choke the money supply and potentially cause a recession in the bargain.
But not everyone jumped on that train. Following the situation from investment banking giant Credit Suisse, chief US equity strategist Jonathan Golub has a mixed view. Predicting a lackluster year for stocks, rather than a total crash, Golub said: “If I’m right in the way that we avoid this recession in the near term, the market will continue. continues to bring you some relief. So the call is that the multiples go up a little bit, the earnings go down a bit, and then you end up with a 3-4% return that’s completely unappealing for the stock between now and the end of the year. .”
What investors need to remember here is that Golub’s ‘unattractive returns’ represent the average – and there will be plenty of stocks that surpass that average and deliver significant growth. His colleagues among Credit Suisse stock analysts are highlighting this fact, by offering recommendations for stocks that, in their view, should deliver a 30% return and increased from there. Under any market conditions, such growth should keep an eye on investors.
For our part, we can give a second look at these Credit Suisse picks. Using the data tools at TipRanks, we collected detailed information about two of them; they’re here, along with analyst commentary.
Exelixis, Inc. (EXEL)
The first company we are looking at is Exelixis, a biotech company that has reached its peak – it has a line of approved drugs on the market, generates steady revenue, and has recently had Strong quarterly earnings history. Exelixis’ drug line is focused on cancer treatment and the company describes itself as a ‘resilient leader’ in the field of oncology.
The main product is cabozantinib, a drug used in the treatment of thyroid and kidney cancer. Exelixis markets the drug under two trade names, Cabometyx and Cometriq, and these names together with the cobimetinib formulation Cotellic – marketed in partnership with Genentech – form the current core of the company’s business.
It’s also a lucrative core. According to the recently released preliminary financial results for Q4 2022 and full year 2022, Exelixis posted total revenue of $1.6 billion last year, compared with total sales of $1.4 billion. dollars in 2021. Going forward, the company is aiming for peak revenue between $1.575 billion and $1,675 billion for 2023. The most recent final numbers come from Q3 of 22, as Exelixis reported. reported a GAAP net income figure of 23 cents per share, beating the consensus estimate of 20 cents per share. Exelixis will report full data for Q4 2022 on February 7.
Going forward in 2023, Exelixis’ main priority will be to conduct clinical trials to expand the product line. Upcoming this year, the company will read data for the Phase 3 clinical trial of cabozantinib in the treatment of metastatic non-small cell lung cancer. This study is being performed as a combination therapy with atezolizumab and enrolled 366 patients. Also in the Phase 3 trial is zanzalintinib, a novel drug candidate (formerly known as XL092) for the treatment of advanced clear cell renal cell carcinoma. The study included 291 patients and will be expanded.
Pipelines aren’t cheap, but beyond the revenue stream, Exelixis has plenty of money. The company ended Q3 of 22 with $2.1 billion in cash and liquid assets on hand, up from $1.9 billion available at the end of 2021.
Joining the bulls, Credit Suisse analyst Geoffrey Weiner is bullish on the company and its stock.
Weiner notes: “Based on our conversations with key opinion leaders (KOLs) and analysis of the renal cell carcinoma (RCC) landscape, we predict product sales could grow to ~$2 billion by 2025, even without potential label expansion.”
“EXEL has enough cash flow to bridge the gap between cabo and its process value creation, including several clinical-stage candidates and an antibody-drug conjugate (ADC) process under development.” underrated/in development… We think the prospects for the home production of the assets zanzalintinib/XL092 (next generation cabo-like TKI) and XB002 (TF-ADC) are overlooked, also such as EXEL’s move to build an ADC protocol. We believe there are many clinical catalysts to spur interest in the two-year follow-up process,” the analyst added.
Looking to the near future, Weiner sees fit to rate EXEL stock at Outperform (i.e. Buy), with a price target of $29 that suggests a strong 65% upside potential in the stock price over the next year.
Overall, EXEL stock maintains a Strong Buy analyst consensus rating, based on 13 recent reviews. These ratings are broken down 11 to 2 in favor of Buy over Hold, and the company’s average $25.33 price target implies a potential 44% upside from its current share price of 17.55 dollars. (See EXEL stock forecast)
Boyd . Game Corporation (BYD)
The next Credit Suisse pick we’re reviewing is Boyd Gaming, one of the major casino operators in the gaming industry. Spread out from his Las Vegas home, Boyd now has 28 properties and gaming properties across 10 states, plus it has a 5% stake in FanDuel Group, a leading sports betting operator. head. Boyd’s expertise has also earned the company a management agreement with a tribal casino in northern California.
This real estate segment has brought Boyd a large source of revenue and income. The company reports full-year 2022 results tomorrow after the market closes, but looking back at Q3 2022, we see that Boyd had top revenue of $877.3 million. That’s up 4% year over year, and with nine-month total sales of $2.63 billion, the company is on track to surpass last year’s figure. At the bottom line, Boyd’s third-quarter adjusted earnings of $1.48 per share were up more than 13% year over year.
Boyd received a boost from strong consumer spending in the wake of the pandemic. It remains to be seen whether this will be sustained in the future; The falling inflation rate should support the consumer discretionary spending segment in general.
Of interest to investors, this year Boyd restored quarterly dividend payments. The company paused dividends starting in 2020, but restarted payments in Q1 2022. The current dividend is 15 cents per common share, more than double the payout. most recent 2019 math. At this rate, the annual payout is up to 60 cents and offers a small return of 1%.
Five-star analyst Benjamin Chaiken, in his article on Boyd for Credit Suisse, offered several reasons why the stock should outperform in the future: “(1) Growth in the Downtown Las Vegas market and BYD’s investment in Freemont property We think the Downtown market could move higher as corporate demand for the Strip returns… (2) BYD is spending $100 million to move its Treasure Chest casino from a river marina to a newly developed land property adjacent to an existing property.comfort, better access and a more cohesive casino floor could offer ROI 20-30% a Tribe management contract for Sky River Casino, which we estimate will cost $36 million in management fees by ’23…”
Based on these four reasons, Chaiken rates BYD sharing an Outperform (i.e. Buy) rating, along with a $82 price target suggesting a potential 12-month upside of 31.5%. (To see Chaiken’s achievements, click here)
Overall, this stock has an analyst consensus on the Street as Moderate Buy, based on 7 analyst ratings consisting of 4 Buys, 2 Holds and 1 Sell. Shares are selling for $62.35 and an average price target of $71.33 suggests ~14% upside potential over a year’s time. (View BYD stock forecast on TipRanks)
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deny the responsibility: The opinions expressed in this article are those of prominent analysts only. Content is used for informational purposes only. It is very important that you do your own analysis before making any investment.
