Whether you love them or hate them, penny stocks are controversial. These tickers, which trade for less than $5 a share, have gained a reputation on Wall Street for being divisive and making it difficult for investors to find common ground on the matter.
The appeal is clear. For the same price as a share of a better-known company, investors can buy hundreds of shares of a penny stock. Additionally, the fact that even a small increase in the stock price can result in irresistible percentage gains lures some investors.
It's also understandable why some investors are cautious. Opponents are quick to point out that there could be a very real reason these stocks are changing hands for loose change, as low share prices often mask obstacles such as weak fundamentals or worrying headwinds.
No matter which side you choose, one thing is certain: careful consideration is required before making any investment decision. That's where the pundits of Wall Street come in. These professionals bring experience and in-depth knowledge with them.
With that in mind, we took inspiration from investment firm Piper Sandler. The company's analyst, Yasmeen Rahimi, has identified two compelling penny stocks, noting that each offers huge upside potential, and could reach $25 or even higher. In fact, not only Rahimi is behind these names. According to the TipRanks database, both stocks are rated as Strong Buys by the analyst consensus.
Immunic, Inc. (IMUX)
We begin with Immunic, a clinical-stage biopharmaceutical company pioneering the development of orally administered small molecule immunotherapies for chronic inflammatory and autoimmune diseases. Immunic's focus is on orally administered drugs, which is an important consideration. Many new drug treatments for autoimmune diseases require intravenous administration, with all the discomfort and inconvenience to the patient. Orally dosed treatment avoids these difficulties.
The Company's current pipeline includes multiple drug candidates, two in the clinic and one in preclinical testing, targeting multiple sclerosis, ulcerative colitis and celiac disease. The Company's lead program targets multiple sclerosis and is in Phase 3 clinical trials.
On the clinical front, Immunic's lead program is IMU-838, vidofludimus calcium, which is being evaluated for the treatment of relapsing remitting and progressive multiple sclerosis and moderate-to-severe ulcerative colitis. The first of these tracks on relapsing remitting MS is the most advanced and is in a Phase 3 clinical trial. Previous Phase 2 studies of this drug candidate demonstrated clinically significant therapeutic activity in the treatment of MS. In April of this year, the company also announced positive Phase 2b data for the use of IMU-838 in the treatment of ulcerative colitis.
The Company's second largest pipeline program is IMU-856, which is being investigated for the treatment of celiac disease. This drug candidate has exceeded the company's expectations, showing success in proof-of-concept studies and in early clinical trials. The company is preparing a phase 2b study of IMU-856 in patients with pre-existing active celiac disease.
Given the potential of the company's drug candidates and its $1.44 share price, Piper Sandler analyst Yasmeen Rahimi thinks now is the time to jump in.
“We remain convinced that IMUX is an undervalued stock as we head towards two important events on the horizon at two strong assets: 1) IMU-838 on track in approximately 225 PMS patients, key biomarker MFL – and read GFAP data in 2H23, and 2) start a Ph2b celiac study with IMU-856 after the positive topline results of Ph1b Part C, where mgmt's next steps are to work carefully on the protocol and design to file an IND application in the US as soon as possible to begin regulatory talks. Overall, we remain confident in the success of the entire IMUX pipeline,” said the analyst.
To that end, Rahimi rates IMUX as “Overweight” (ie, “Buy”) and its price target of $28 implies an impressive upside potential of 1,844% over the next 12 months. (To view Rahimi's track record, click here)
So that's Piper Sandler's view: How does the rest of the street see IMUX evolving over the next 12 months? Consensus analysts rate the stock as a “Strong Buy” based on 3 “Buy” ratings and 1 “Hold”. The average price target of $13.25 suggests the stock could climb 820% over the next year. (See IMUX stock forecast)
Altimmune, Inc. (OLD)
The next penny we'll be looking at is Altimmune, a clinical-stage biopharmaceutical company focused on peptide therapeutics, a class of drugs with applications in liver disease and obesity-related conditions. Altimmune's peptide research aims to develop novel therapeutic compounds with great potential for the treatment of various serious health conditions.
The Company currently has three titles in its pipeline, all in clinical development. Two of these tracks examine the lead drug candidate pemvidutide. This is a GLP-1/glucagon dual receptor agonist that has been shown in clinical trials to treat obesity and nonalcoholic steatohepatitis, a form of fatty liver disease. The company's third research focus includes HepTcell, an immunotherapy drug being developed by Altimmune for the treatment of the life-threatening chronic viral disease hepatitis B.
These three stocks paint a compelling picture for investors to consider. In March, the company announced positive data from the 24-week leg of the phase 2 MOMENTUM study of pemvidutide in the treatment of obesity and is currently conducting a 48-week leg of the same study. Top-line results from the 48-week MOMENTUM study are expected in Q4 2023.
Altimmune is also conducting the Phase 2 trial of HepTcell, which it hopes can become a functional cure for chronic Hep-B. The results of this study are expected to be published in Q1 2024.
Finally, the company is in the process of initiating the phase 2b trial of pemvidutide for the treatment of NASH. This study will run for 24 weeks. Thereafter, patients should experience a reduction in NASH and fibrosis, followed by an additional 24 weeks of treatment. If gastrointestinal intolerance occurs in patients, dose reduction is allowed. The company expects to post 25 revenue results by Q1.
Despite its rich pipeline of therapeutic candidates, Altimmune's stock has fallen 71% over the past 12 months. According to Piper Sandler's Yasmeen Rahimi, this presents an opportunity for the stock to see significant growth.
“We believe this stock has been overly penalized by Street despite pemvidutide MOMENTUM's strong interim data showing competitive weight loss and some of the strongest liver defatting we've seen from the NAFLD data.” of Ph2b IMPACT in NASH, which is expected to be introduced in mid-2023, is significantly reduced. Additionally, we believe the full 48-week MOMENTUM (n=320) will reignite investor interest in the name. Additionally, we believe there is a compelling story for pemvidutide as ALT participates in potential partnership talks for both obesity and NASH,” the analyst said.
Looking ahead, Rahimi rates ALT as Overweight (ie, Buy) with a price target of $25, suggesting strong upside potential of 646% by mid-next year.
Overall, this stock has received a unanimous consensus rating of “Strong Buy” from Wall Street based on four recent positive analyst ratings. The average target price of $29 suggests a robust 12-month uptrend of 765% from the current trading price of $3.35. (See ALT stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is for informational purposes only. It is very important to do your own analysis before investing.