The major headlines that have had an impact on the markets lately can be classified into three broad categories: US inflation, which remains stubbornly high and shows no signs of slowing down, geopolitical issues, primarily the war in Ukraine, and also the COVID blockages in China. These pull in various, sometimes contradictory, directions and can create a confusing investment situation.
Watching market conditions for investment giant JPMorgan, global market strategist Marko Kolanovic believes investors should keep their portfolios heavy on stocks.
“We maintain a pro-risk view and continue to recommend OTs [i.e. Buy positions] in stocks… Before the war in Ukraine, growth was expected to pick up to well above trend as we reopen from the Omicron wave and witness an unleashing of pent-up consumer and business demand. Although the outlook for growth has been downgraded over the past month, much of that momentum remains and we continue to see support from strong labor markets, light investor positioning, healthy balance sheets for consumers and businesses, policy easing in China and fiscal supports in several countries to offset some of the drag from high energy prices,” Kolanovic said.
Following this lead, JPMorgan stock analysts have picked stocks they see as potential winners, with the potential to gain 40% or more in the coming months. We used the TipRanks platform to get the latest scoop on these picks; Here are the details.
Silvergate Capital (IF)
We’ll start with Silvergate, a California-based commercial bank that focuses on the digital currency industry. Silvergate serves a wide variety of commercial clients, including institutional investors, fintech software companies, and digital currency exchanges. The company began to focus on digital in 2013, after 25 years in the banking industry, and as digital currency grew, so did Silvergate. The bank currently has more than 1,300 customers and has been profitable for 20 years.
This mid-cap bank will release its 1Q22 results next week, but we can get a sense of where it stands with a look back at Q4 and 2021. The bank posted net profit of 66 cents per share, down from 88 cents in previous quarter. , but up 40% from 4Q20. Silvergate’s asset base was strong, growing from $5.5 billion at the end of 2020 to $16 billion at the end of 2021, and the bank boasted an 18% sequential gain in average customer currency deposits. digital, at $13.3 billion.
Among the bulls is Steven Alexopoulos of JPMorgan who notes that Silvergate is uniquely suited to thrive as market conditions change.
“With all eyes on the Fed’s QT and rate outlook, as the futures market implicates 10 rate hikes through the end of 2023, asset sensitivity is one of the key criteria that are on the radar of banking investors today. For investors looking to increase their exposure to asset-sensitive banks, we believe they need look no further than Silvergate, with the company being the most asset-sensitive bank assets in the U.S. Silvergate is heavily dependent on rising short-term rates, with net interest income expected to rise 60% for a parallel shock of 100 basis points and more to interest rates,” said explained Alexopoulos.
In light of these comments, Alexopoulos assesses that SI shares an overweight (i.e. buy), and his price target of $200 suggests he has an impressive upside potential of around 59% on a year. (To see Alexopoulos’ track record, Click here)
It’s clear from the 8 unanimously positive analyst reviews on this stock that Wall Street broadly agrees with the bulls here – and gives SI a Strong Buy analyst consensus rating. SI shares are trading at $126 and their average target of $201.13 fits perfectly with JPM’s view. (See SI stock forecast on TipRanks)
The next JPM pick we’re considering is Sprinklr, an experience management company, offering business customers a SaaS platform to unify electronic communications – voice calls and messaging, emails and live chat – through a AI-enabled engine. The company is a tech unicorn, valued at around $2.7 billion before its IPO in June last year. While the stock is down 22% since the IPO, the company still has a market capitalization of $3.53 billion.
Sprinklr reported earnings 3 times as a public entity, and a look at the results shows a positive trend line. For fiscal Q422, which ended Jan. 31, the company had total revenue of $136 million, up 30% year-over-year, and the second consecutive quarter sequential wins. EPS has also increased since the IPO. On a non-GAAP basis, it was recorded as a loss of 9 cents per share in fiscal 2Q22 – but that moderated to an EPS loss of 5 cents in the current quarter.
Looking ahead, Sprinklr is targeting total revenue of $140 million to $142 million for fiscal 1Q23, for a 3.6% sequential gain at the midpoint. The company expects growth in subscription revenue to drive this result, with subscriptions bringing in between $123 million and $125 million. For the full fiscal year 2023, the company expects revenue of between $607 million and $615 million; mid-term, this will represent a 24% gain over FY22, which in turn saw revenue increase 27% over FY21.
Covering the Sprinklr stock for JPMorgan, 5-star analyst Mark Murphy writes, “We remain encouraged by the company’s ongoing product innovations and believe a healthy pipeline heading into FY23 creates a attractive backdrop for the company and the stock, especially at current depressed valuation levels…We continue to believe that Sprinklr is well positioned to benefit from a higher rate of investment in customer experience as a source of competitive differentiation and believe that a strong growth track for the company’s growing sophisticated platform presents attractive longer-term risk-reward dynamics. ”
With these comments as a basis, Murphy assesses that Sprinklr shares an overweight (i.e. buy); its price target of $20 implies an upside of around 45% for the next 12 months. (To see Murphy’s track record, Click here)
After less than a year in the public markets, Sprinklr has already garnered 9 analyst reviews. These break down into 5 buys and 4 holds, giving the stock a moderate buy consensus rating from analysts. The average price target of $16.86 implies an upside of approximately 22% from the current trading price of $13.83. (See Sprinklr stock forecast on TipRanks)
Cara Therapeutic (CARA)
We don’t think much about our skin, but the skin is the body’s largest organ, and an itch can be a symptom of something wrong underneath. Cara Therapeutics is a late-stage, commercial-stage biopharmaceutical company with a single product—difelikefalin, under the trade name KORSUVA—developed as a treatment for pruritus, the fancy name for itchy skin.
As an injectable treatment, KORSUVA received FDA approval last year as a treatment for itchy skin associated with chronic kidney disease in adults on hemodialysis. The company is launching KORSUVA this month in collaboration with Vifor, its business partner. The partners have assembled marketing and sales representatives, and Cara reports that sufficient stock of KORSUVA has been manufactured and is in storage pending distribution orders.
In addition to the approved application above, KORSUVA is in Phase 2 and 3 clinical trials as an oral treatment for itchy skin caused by chronic kidney disease (CKD), chronic liver disease (CLD), atopic dermatitis (AD) and notalgia paresthetica (NP). Phase 3 trials on the CKD and AD indications should start in 1H22.
Cara achieved exceptional sales in 4Q20, due to Vifor’s partnership costs. Since then, the company has seen minimal revenue, although it expects that to change as KORSUVA launches. Cara had $236.8 million in cash at the end of December 2021 to fund its operations.
JPMorgan’s Jessica Fye covers this biopharmaceutical as it emerges into the commercial realm, and she’s impressed with what she’s seeing.
“We see >$700m sales potential in 2030 WW for the Korsuva injection, which we see establishing valuation support for the stock. Indeed, at current levels, we see CARA shares reflecting the potential risk-adjusted commercialization of Korsuva injection in hemodialysis patients alone with limited downside from short-term clinical readouts involving oral Korsuva,” Fye noted.
“With the stock falling [25%] from its November highs, but no fundamental change in how we think about the Korsuva Injection launch or the chances of success in the upcoming oral readings and given the relatively strong balance sheet, we see more favorable risk/reward at levels current,” the analyst added.
These comments confirm Fye’s overweight (i.e. buy) rating on CARA shares, while his price target of $19 suggests 40% upside potential over 12 months. (To see Fye’s track record, Click here)
The rest of the street supports Fye’s thesis. In fact, the average price target is even more optimistic; at $26, the figure is expected to generate 12-month returns of 91%. The stock has a Strong Buy consensus rating, based on a unanimous opinion from 4 Buy. (See CARA stock forecast on TipRanks)
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Warning: The views expressed in this article are solely those of the analysts featured. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.