Market sentiment has changed noticeably in recent weeks. According to a recent survey by the American Association of Individual Investors (AAII), bullish sentiment has reached about 45%, its highest level since November 2021.
This is reflected in market action: more than 55% of stocks in the S&P 500 are currently trading above their 50-day and 200-day moving averages.
Larry Adam, Raymond James' Chief Investment Officer, adds his perspective, stating, “With the earnings outlook improving in the second half of 2023 and the economy defying recession expectations, it's no surprise that both the NASDAQ as well as the S&P 500 have officially done so.” entered a new bull market.”
However, Adam advises investors not to get too excited. “While history is on the side of the market – the S&P 500 is historically up over 40% in the first year of a bull market and is up ~14% a year after the Fed ended its tightening cycle – the surge in the bullish mood and the ‘overbought' mood. Circumstances suggest that caution may be warranted in the near term,” he added.
However, this is not necessarily true for all stocks. Raymond James analysts are still pointing out the names primed to continue higher from here – they have identified two stocks as strong buys in the current environment. We ran these tickers on the TipRanks platform to also see how they compare to other Wall Street equity experts. Let's look at the details.
intervertebral disc medicine (IRON)
The first name endorsed by Raymond James that we'll be looking at is Disc Medicine, a biotech company focused on discovering and developing novel therapies for hematological diseases. Disc Medicine is dedicated to solving the significant unmet medical needs of patients suffering from serious blood disorders by targeting the biology of the disc-shaped red blood cell.
The company's strategic approach focuses on targeting signaling pathways that have a direct impact on the development of red blood cells, also known as erythropoiesis. The programs are specifically designed to regulate two essential processes critical to the proper functioning of red blood cells: heme biosynthesis and iron metabolism. By manipulating these fundamental components of erythropoiesis, Disc Medicine's programs have the potential to address a broad spectrum of hematological disorders.
Meanwhile, the company continues to make progress in its pipeline and provided an update earlier this month. Disc Medicine presented preliminary data from the ongoing open-label Phase 2 BEACON study evaluating bitopertin, an orally administered glycine transporter-1 (GlyT1) inhibitor indicated for the treatment of patients with erythropoietic protoporphyria (EPP) and X- chromosomal protoporphyria (XLP) is indicated. . The data obtained to date show consistent reductions in PPIX levels, notable improvements in reported tolerance to sunlight, and positive advances in measures of patient quality of life.
The drug may still need to be shown to work on a larger scale, but Raymond James analyst Danielle Brill says the results so far are very promising.
“Although the dataset is small, we believe it provides compelling evidence for bitopertin's disease-modifying potential in EPP,” she said. “Importantly, bitopertin demonstrated (1) dose-dependent reductions in PPIX (>30% at both doses), (2) significantly increased light tolerance from baseline, and (3) clean safety without inducing appreciable reductions in Hb levels from baseline baseline were observed…” In our view, the results to date meet all criteria and provide solid evidence of efficacy for bitopertin as a functional remedy for EPP.”
“Given our belief that the Ph 2 RCT dataset (expected early next year) will provide definitive evidence for the disease-modifying effect of Biopertin in EPP, we are changing our rating to Buy Strong,” Brill added.
That's an upgrade from the previous Outperform rating (ie, Buy), and with the price target now at $75 (up from $50 previously), Brill believes the shares will have a return in the year ahead of about 42% can be achieved. (To view Brill's track record, click here)
Brill's attitude has the full support of her peers. The stock earns a consensus rating of Buy Strong based on just 9 purchases in total. However, shares have rallied strongly of late, and after being up 166% year-to-date, the median target of $57.13 leaves room for just 8% further upside potential. (See Disc Medicine Stock Forecast)
Dish Network (COURT)
Now let's shift our focus to a completely different industry for our next Raymond James pick. DISH Network is a major player in digital television entertainment services. Based in Englewood, Colorado, the company occupies a prominent position as one of the largest pay-TV providers in the United States thanks to its direct-to-home (DTH) offering. In addition to its satellite provider Dish and streaming service Sling TV, DISH Network has significant spectrum holdings and is actively building a pioneering nationwide 5G network. In particular, it is the first 5G Standalone (SA) network based on an open Radio Access Network (RAN).
According to a recent update, 5G service is now available to more than 70% of the US population. This is a major milestone for the company, as it was committed to achieving this goal by the FCC as part of the agreement that enabled T-Mobile to buy Sprint.
However, not everything has been going smoothly lately. Dish's recent performance in the first quarter left a lot to be desired. Due to subscriber losses, revenue fell 8.5% year over year to $3.96 billion, but also missed the consensus estimate by $100 million. At the other end of the scale, earnings per share fell to $0.35 from $0.68 in the year-ago period, below stock market expectations of $0.39.
Although the overall market development was positive in 2023, DISH recorded a significant drop of 53% since the turn of the year. As noted by Raymond James analyst Ric Prentiss, there are other issues the company needs to address. Still, the fact that the aforementioned 5G milestone has been reached is a big deal and could turn the tide.
“Given DISH's dramatic decline in debt and equity year-to-date and a significant increase in interest rates in 2022 and 2023, any financing for the company is likely to be very expensive. However, we believe that the achievement of the 70 percent target, combined with a pause in build-out investments and an expected significant reduction in the Transition Services Agreement (TSA) with T-Mobile, should significantly reduce the burn rate and provide near-term improvement “We're improving the cash flow profile and hopefully helping to lower the company's cost of capital,” noted Prentiss.
To that end, Prentiss rates DISH stock as a “strong buy,” backed by a price target of $21. That means shares are poised to surge a whopping 217% in the coming months. (To view Prentiss track record, click here)
Overall, the Street's statement shows conflicting signals. On the one hand, the stock merely claims a “hold” consensus rating based on 7 “hold”, 4 “buy” and 1 “sell”. Still, most seem to think the stocks are significantly undervalued; At $15.45, the average target accommodates a 133% one-year return.. (See DISH 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.