Threat and reward usually 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 value comes the potential for excessive beneficial properties, as even an incrementally small value improve will translate to a excessive proportion acquire.
Nevertheless, earlier than leaping proper into an funding in a penny inventory, Wall Avenue execs advise wanting on the greater image and contemplating different elements past simply the worth 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 progress prospects due to weak fundamentals, latest headwinds and even giant excellent share counts.
As the character of those investments makes it tough to gauge the power of their long-term progress prospects, one efficient inventory deciding on technique is to comply with the analysts’ recommendation.
Utilizing TipRanks’ database, we locked in on two penny shares which have garnered glowing evaluations from the Avenue, sufficient to earn a “Sturdy Purchase” consensus score. To not point out every provides large upside potential. Let’s take a better look.
Daré Bioscience, Inc. (DARE)
We are going to begin with Daré Biosciences, a medical 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 therapy of bacterial vaginosis.
Xaciato introduced Daré its first income, with a $10 million money fee from Organon in 3Q22, pursuant to the 2 corporations’ license settlement. The 2 corporations are working to coordinate the launch of Xaciato this yr.
On the pipeline aspect, Daré has seen a number of latest constructive developments. In November of final yr, the corporate introduced constructive topline outcomes from the DARE-VVA1 Section 1/2 medical research of tamoxifen, a proprietary drug formulation designed for vaginal software to deal with vulvar and vaginal atrophy in sufferers with ER/PR+ breast most cancers. The corporate plans to report the ends in a peer-reviewed publication.
In a second Section 1/2 research, DARE-HRT1, the corporate reported constructive pharmacokinetic outcomes earlier this month. This research focuses on a month-to-month intravaginal ring to ship estrogen and progestogen hormones for the therapy of vasomotor signs attributable to menopause. Based mostly on this profitable trial, the corporate plans to advance to a Section 3 efficacy trial.
On the contraceptive monitor, Daré has obtained FDA approval of an IDE software for a pivotal research of Ovaprene, a hormone-free month-to-month intravaginal contraceptive system. This approval clears the best way for a Section 3 medical trial, which is focused for initiation in the midst of this yr. Daré is engaged on Ovaprene together with Bayer, and the drug candidate has potential to turn out to be the primary month-to-month dosed intravaginal contraceptive available on the market.
Based mostly on doubtlessly important catalysts in addition to its $1.15 share value, a number of members of the Avenue assume that now could be the suitable 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 ladies’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 possibility available on the market; 2) Daré’s portfolio belongings are approvable through the 505(b)(2) pathway, de-risking regulatory approval; 3) Business partnerships with huge gamers within the ladies’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 danger/profit profile of pipeline merchandise for sexual dysfunction, vulvovaginal atrophy, and being pregnant upkeep.”
Novack backs up her bullish stance with a Purchase score on the inventory, whereas her $6 value goal suggests a whopping upside potential of 422%. (To observe Novack’s monitor file, click here)
The Avenue is clearly optimistic on this penny inventory, as all 5 latest analyst evaluations are constructive – for a unanimous Sturdy Purchase consensus score. With a median value 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 therapy of most cancers. Particularly, the corporate develops drug candidates with potential to enhance affected person end result by focusing the immune system’s exercise instantly and selectively to the location of the tumor. Xilio has a proprietary growth platform and is constructing novel, tumor-activated molecules for optimum impact within the tumor microenvironment. The corporate’s three lively medical trial packages are all at early levels – however have been displaying promising outcomes.
The primary trial, an ongoing Section 1 research of XTX202, is testing the tumor-activated in opposition to interleukin-2, or IL-2, as a therapy 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 Section 2 monotherapy research throughout 1H23, and to report preliminary information on security and anti-tumor exercise from the Section 1/2 trial in 3Q23.
On the second trial, of XTX301, a tumor-activated IL-12 drug candidate, the corporate has obtained FDA clearance of the IND software to conduct an lively medical research. Xilio plans to provoke affected person dosing in a Section 1 medical trial throughout this quarter and expects to report preliminary information from the Section 1 trial throughout 4Q23.
The ultimate medical 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 Section 1 trial in opposition to superior stable tumors, and is presently in search of a accomplice with the intention to conduct additional testing.
In a evaluation of Xilio for Chardan, analyst Matthew Barcus writes: “We see sturdy potential with the corporate’s two lead cytokine packages XTX202 and XTX301… We presently mannequin XLO’s belongings attaining $320 mm in projected risk-adjusted 2030 gross sales. We consider XLO is well-positioned to turn out to be a frontrunner within the subject of immuno-oncology and we look ahead to a number of key catalysts in 2023 from the corporate’s packages.
Wanting ahead, Barcus charges XLO shares a Purchase, and his value goal of $7 implies that the inventory has a 12-month upside potential of 143%. (To observe Barcus’ monitor file, click here)
That’s a bullish take – however the Avenue is much more optimistic. XLO has a Sturdy Purchase consensus primarily based on 4 unanimously constructive analyst evaluations, and the typical value goal of $12.25 suggests a one-year acquire of ~326% from the present share value of $2.88. (See XLO stock forecast at TipRanks)
To search 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 essential to do your individual evaluation earlier than making any funding.