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3 “Strong Buy” Healthcare Stocks Under $5 That Could See Outsized Gains

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The stock market just keeps going up, up and away. COVID-19 continues to have a choke hold on the economy, yet stocks have pulled off an incredible recovery, with the S&P 500 up 50% since its March low point. But can the index keep the rally alive?Credit Suisse’s global equity strategy analyst Andrew Garthwaite says yes, noting that by the end of next year, the S&P 500 could “easily hit 3,500 on our models.” He believes there won’t be a major correction, and that “the key is whether you want to buy into dips or sell into rallies and we want to buy into dips.”Why should investors keep buying? “We’re going to get a combination of easy money, easy fiscal, with yield curve control — i.e. fiscal QE [quantitative easing] — until unemployment returns to politically acceptable levels,” Garthwaite explained.Against this backdrop, Wall Street pros argue that certain sectors are holding up substantially better than the rest, and within these areas, compelling plays can be found. Highlighting the healthcare space, the pros say there are names that have not only received a lot of love from the analyst community, but also stand to deliver hefty returns through 2020 and beyond.As these stocks tend to be riskier in nature, we narrowed our search to include only the best of the best, according to the analyst community. TipRanks’ database revealed three such stocks that won’t break the bank.; each one trades for less than $5 per share and has earned a “Strong Buy” consensus rating from the Street’s pros. If that wasn’t enough, plenty of upside potential is at play here. Gritstone Oncology Inc. (GRTS)With the goal of stomping out cancer once and for all, Gritstone Oncology develops personalized immunotherapies to fight multiple cancer types. Currently going for $3.45 apiece, several members of the Street believe that the share price reflects an attractive entry point.Looking at the company’s clinical activity, GRTS is conducting a Phase 1 dose escalation of its GRANITE (personalized vacccine targeting cancer neoantigens) and SLATE (off-the-shelf cancer vaccine targeting shared “hotspot” neoantigens) in patients with advanced cancer. Updated data from July indicated that some patients had experienced prolonged stable disease and/or tumor regression, but none had risen to the level of a RECIST response.Weighing in on the results for H.C. Wainwright, analyst Sean Lee wrote, “In our view, GRANITE and SLATE are both safe and showed encouraging signs of efficacy, which should warrant further study in larger patient populations. Both GRANITE and SLATE are well-tolerated, and as of the June 30 data cut-off date, zero dose limiting toxicities (DLTs) have been reported in the GRANITE study and only two DLTs had been reported in the SLATE study… Therefore, we believe the 50% decline in GRTS stock price on July 13 to be an overreaction which has created an attractive buying opportunity.”Going forward, GRTS will kick off single-arm Phase 2 studies for both GRANITE and SLATE in advanced cancer in 2H20. For GRANITE, the study will include two cohorts of MSS-CRC patients with prior FOLFOX/FOLFIRI therapy and GEA patients with prior chemotherapy. Based on the fact that checkpoint inhibitors have either no (MSS-CRC) or very little (GEA) activity in GI tumors, management has stated that if multiple responses in these cohorts are observed, it would demonstrate additive efficacy and could ultimately support accelerated approval.As for SLATE, GRTS is set to evaluate the original cassette of SLATE (Cassette v1) in ovarian cancer patients with the TP53 mutation and NSCLC patients with prior immunotherapy/chemotherapy. A new version of the SLATE cassette (Cassette v2) designed to optimize the immune response to KRAS mutations will also be assed.“The Phase 2 GRANITE study is expected to report data in 2H21, and the results from Phase 2 studies of SLATE Cassette v1 and Cassette v2 are anticipated in 1H21 and 2H21, respectively. In our view, all of these could be major catalysts for the stock,” Lee commented.To this end, LEE rates GRTS a Buy along with a $16 price target. Should his thesis play out, a potential twelve-month gain of 365% could be in the cards. (To watch Lee’s track record, click here) Other analysts are also optimistic about the stock. GRTS' Strong Buy consensus rating breaks down into 3 Buys and no Holds or Sells. In addition, the $14 average price target brings the upside potential to 307%. (See GRTS stock analysis on TipRanks)PDS Biotechnology Corporation (PDSB)Using its patented Versamune platform, PDS Biotechnology develops innovative infectious disease (ID) vaccines and cancer immunotherapies. Based on its impressive technology platform and $4.35 share price, it’s no wonder this name is scoring the Street’s attention.5-star analyst Geulah Livshits, of Chardan Capital, is even more optimistic after a recent call with PDSB’s CMO Dr. Lauren Wood.Highlighting the takeaways from the call, Livshits points out that it’s important to consider the similarities between cancer and ID pathogens. Part of the problem when it comes to developing cancer-targeting vaccines is that many cancer antigens are also present in normal tissue, with the immune system failing to view these self-antigens as foreign. “As such, a key gating factor for developing cancer vaccines, which can translate over to ID vaccine development, is triggering innate immunity (specifically type I interferon signals),” the analyst explained.According to Dr. Wood, T cell responses are often longer-lived than antibody responses. Livshits wrote, “Although the field does not yet fully understand what that means for immunity duration (or indeed what titer levels are sufficient for protection from SARS-CoV-2), the efficient induction of a high quality T cell response may promote longer lasting immune memory, potentially translating to longer protection or a milder disease course upon subsequent exposure.”That’s where PDSB comes in. Versamune is an adjuvant designed to overcome the mechanisms that suppress the innate immune response, specifically triggering type I interferons. In both cancer and ID, Versamune triggers “excellent presentation of antigens” by both the class I and class II pathways, creating potent, broad and long-lived T cell responses, as well as antibody responses.Also encouraging, the platform can stimulate the immune system locally (in the skin) when delivered, with Dr. Wood also noting that “Versamune's adjuvant tech can be co-formulated and delivered with other platforms beyond protein/peptides, including DNA or mRNA, to enhance immunogenicity.”Looking at its performance in a clinical setting, there has been a documented triggering of type I interferons associated with HPV tumor regression in a clinical mouse model, verified immune memory demonstrated by mice resistant to tumor re-challenge, high levels of specific CD8 killer T cells within two weeks of a single dose of vaccine and T cell regression of virus-mediated lesions. Versamune has also been well tolerated.Adding to the good news, in preclinical studies, when Versamune was co-delivered with Fluzone, a seasonal influenza vaccine, neutralizing antibody titers were 40x higher compared to Fluzone alone. Livshits added, “With regard to SARS-CoV-2, initial preclinical data in mice show the Versamune-based Covid-19 vaccine candidate induces robust neutralizing antibody response levels equivalent to those observed in recovering Covid-19 patients within 2 weeks of vaccination.”It’s clear why Livshits continues to take a bullish stance. In addition to keeping a Buy recommendation on the stock, the price target remains at $10. The implication for investors? Upside potential of 150%. (To watch Livshits’ track record, click here) With 3 "buy" ratings against just 1 "hold," PDSB shares have earned their Strong Buy consensus rating. Meanwhile, the $7.32 average price target implies shares could climb 83% higher in the next twelve months. (See PDSB stock analysis on TipRanks)GlycoMimetics (GLYC)Hoping to improve the lives of patients with unmet medical needs, GlycoMimetics develops small-molecule glycomimetic product candidates. According to Wall Street analysts, at $3.86, its share price could present investors with an opportunity to get in on the action.Standing squarely with the bulls is Roth Capital’s Zegbeh Jallah. Following the analyst’s virtual meeting with the management team, he is confident in GLYC’s long-term growth prospects.Pointing to GLYC’s Phase 3 Rivipansel asset, which was designed as a treatment for patients with Sickle Cell, Jallah argues that there is a substantial market opportunity. In the U.S., there are roughly 100,000 sickle cell patients, with some of these hospitalized 1-3 times per year for painful vaso-occlusive crisis (VOCs). Opioids are the current standard of care, but there are significant concerns regarding dependency. “We believe that a need exists for treatment options that can lessen the risks associated with opioid use, without leaving patients in pain,” the analyst commented.Currently, Rivipansel, an IV-delivered, pan-selectin antagonist, is the only therapy being clinically developed for this application. It differs from Novartis’ Crizanlizumab, a p-selectin antibody that is used to prevent VOCs, as p-selectin plays an earlier role than other selectins. “With Rivipansel more potent against e-selectin and with a half-life of 8 hours, Phase 1 data showed that its benefits were present after the onset of a VOC,” Jallah explained.As for the Phase 2 study, the results were also encouraging. However, in the Phase 3 study, the drug failed to meet its primary endpoint of time to readiness-to-discharge. That being said, Jallah still has high hopes. Expounding on this, the analyst stated, “Encouragingly, recent post-hoc analysis showed that patients treated early in their VOC achieved a significant benefit, and management noted that similar trends were observed in the Phase 2 study where there was also a significant reduction (83%) in IV opioid use. In line with the outcomes of the post-hoc analysis, an important difference between the Phase 2 and Phase 3 studies was that patients were treated earlier in their VOC in Phase 2 than in Phase 3.”Now that Rivipansel is wholly-owned by GLYC (the company had previously partnered with Pfizer on the program), management will discuss the next steps with the FDA as well as offer additional analysis of the Phase 3 study.When it comes to Phase 3 Uproleselan, which has received Breakthrough Designation, Jallah believes it “could be an excellent backbone therapy to multiple agents and in multiple treatment settings of AML, with its balanced efficacy and safety profile.” He added, “…novel drugs that can allow patients to become eligible for curative transplants would be a major value-add. GlycoMimetics’ Uproleselan has the potential to do just that, as it can impair signaling that leads to resistance, allowing for multiple treatment combinations to result in deeper remissions and long-term effectiveness.” Its GMI-1359 candidate, which is currently in Phase 1, “could have potential in multiple tumor types including leukemias and solid tumors.”With upcoming catalysts from these clinical programs and a cash runway of two years, the deal is sealed for Jallah. To this end, he maintained a Buy recommendation and $9 price target, suggesting 133% upside potential. (To watch Jallah’s track record, click here) Looking at the consensus breakdown, other analysts have also been impressed. Based on 4 Buys and no Holds or Sells, the word on the Street is that GLYC is a Strong Buy. Not to mention the $11 average price target is more aggressive than Jallah’s and implies 187% upside potential. (See GlycoMimetics stock analysis on TipRanks)To find good ideas for healthcare stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.



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Tesla Slumps as Battery Day Letdown Clouds $320 Billion Gain

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(Bloomberg) — Tesla Inc.’s highly anticipated “Battery Day” fell short of expectations that helped fuel its $320 billion surge in market value this year, with Elon Musk outlining grandiose goals that will take time to pull off.The chief executive officer laid out a plan Tuesday to build a $25,000 car and cut battery costs in half over the next three years. Analysts said while the technology and manufacturing innovations outlined were impressive, Tesla’s valuation already reflected its ability to disrupt and investors may be let down by the lack of surprises at the much-hyped battery-showcase event.This seemed to be the case on Wednesday, as the company’s shares fell as much as 10% to $380. They were trading at $380.16 as of 2:48 p.m. in New York and are up about 360% for the year so far.“With the Battery Day in the rearview, we think there is a lack of upcoming catalysts and are cautious about demand given the recessionary environment,” Robert W. Baird’s Ben Kallo wrote in a Wednesday report naming Tesla a bearish “fresh pick.”That was echoed by Patrick Hummel, an analyst at UBS with a “neutral” rating on the stock, who said in a research note Tesla’s leadership in battery technology and costs is fully valued into the stock. “Given the high expectations into the event, we think the market will initially respond negatively to the relatively long timelines of the innovations and the lack of granularity,” he wrote.Musk, 49, said Tesla wants eventually to produce 20 million cars a year. He described a series of innovations that include using dry-electrode technology and making the battery a structural element of the car. Those incremental and longer-term advances belied expectations for a blockbuster leap forward, which Musk himself played up in the weeks leading up to the event.“The challenge with the stock is that everything they are talking about is three years away,” said Gene Munster, managing director of Loup Ventures. “I think traditional auto is in an even tighter spot, but Tesla investors want this tomorrow.”Vertical-integration improvements — from making its own battery cells on a pilot line at its factory in Fremont, California, to owning rights to a lithium clay deposit in Nevada — are designed to allow Tesla to cut costs and offer a cheap car as soon as 2023.“This has always been our dream from the very beginning,” Musk said at the event focused on Tesla’s battery technology. “In about three years from now, we are confident we can make a compelling $25,000 electric vehicle that is also fully autonomous.”Halving Battery CostsMusk is teasing prospects for a cheaper mystery model without ever having really delivered on the $35,000 price point he had long promised for the Model 3. Three years after Tesla started taking orders for the car in early 2016, the CEO announced plans to close most of Tesla’s stores as a cost-saving measure, allowing him to offer the car at that cost. He backtracked 10 days later, and the cheapest Model 3 available now is $37,990.Making a truly mass-market electric car and boosting Tesla’s current annual production to 20 million cars will require vastly more batteries than are currently being produced from a handful of suppliers around the world. So Musk plans to expand global capacity by manufacturing battery cells in-house to supplement what it can buy.“Today’s batteries can’t scale fast enough,” said Musk, who is driven in part by the need to find sustainable energy sources. “There’s a clear path to success but a ton of work to do.” Musk said the gasoline-powered internal-combustion engine will one day be obsolete.Musk described an “incredible series of innovations with varying levels of difficulty,” said Venkat Viswanathan, a battery expert at Carnegie Mellon University. While battery-manufacturing advances are feasible and deliverable in the three-year time frame, Viswanathan thinks that chemistry developments will take a longer.If the planned innovations pay off, vehicle range could increase 54%, cost could decrease 56% and investment in gigafactories could decline 69%, said Andrew Baglino, Tesla’s senior vice president for powertrain and energy engineering.BloombergNEF estimates Tesla’s pack prices were $128/kWh in 2019. A 56% cost reduction would bring prices down to $56/kWh. In addition to the pilot line for battery-cell production in Fremont, and Musk said the company also will make cells at the factory that is under construction in Berlin.Battery Cell ‘Leap’Most global automakers have shied away from making their own battery cells, citing the high investment costs and their lack of expertise in an industry dominated mostly by Asian electronics manufactures such as Panasonic Corp. and LG Chem Ltd.Musk said in a tweet Monday that Tesla will need to start producing its own battery cells to support its various products, even as it ramps up purchases from outside suppliers. He wrote that the company expects significant shortages of cells in 2022 and beyond unless it ramps up output of its own.“I’m really surprised that they’re taking that leap themselves,” said Tony Posawatz, a consultant who led development of General Motors Co.’s plug-in hybrid Chevrolet Volt and now sits on the board of Lucid Motors Inc., a Tesla rival. “I think this is going to be a bit harder than what they think, and I don’t think we’ll see a lot of volume out of that for quite some time.”Tesla’s most important and long-standing partner on batteries is Osaka-based Panasonic, but it also has smaller-scale agreements with Contemporary Amperex Technology Co., or CATL, in China’s Fujian province and South Korea’s LG Chem.Read more: LG Chem, Panasonic Slide as Tesla Looks to Lower Battery CostsThe highly technical Battery Day presentation included several nuggets of news that were overshadowed by the talk of cathodes and electrolytes. One example: The “Plaid” version of the Model S sedan — with a range of 520 miles — is now available to order, though the vehicle isn’t expected to go on sales until late 2021.Tuesday’s three-hour event began with the annual shareholder meeting, held outside to allow for social distancing. Shareholders sat in Tesla cars in a parking lot, beeping loudly instead of cheering as Musk spoke.Investors voted to re-elect Musk and chairman Robyn Denholm to the board and voted against resolutions that would have required more transparency about human rights in the supply chain and the use of arbitration with employees. One shareholder resolution, which requires Tesla to adopt a simple majority vote, did pass.Musk told shareholders he expects to see deliveries grow on the order of 30% to 40% this year, reaffirming Tesla’s forecast at a time when automakers are struggling to recover from the coronavirus pandemic. “While the rest of the industry has gone down, Tesla has gone up,” he said.Tesla has said it anticipates delivering 500,000 vehicles in 2020, up about 36% from 2019. In July, the electric-car maker said achieving that goal would be “more difficult” due to a pandemic-related production shutdown early in the year. Global sales are projected to drop about 17% this year to 75 million from 90 million last year, according to research firm LMC Automotive.(Updates stock performance in third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.



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The Census is due in a week. What happens if it’s incomplete?

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Amid congressional debate over a new Supreme Court justice and a second COVID stimulus package, Washington is faced with another divisive challenge: the race to complete the 2020 Census by its now-shortened deadline of Sept. 30.

The Census shouldn’t be a partisan issue. Many on both sides of the aisle recognize the importance of successfully completing the once-a-decade national headcount that determines the number of House seats, the apportionment of $1.5 trillion in federal funding, infrastructure planning, and so on. President Trump initially agreed with this, urging Congress in April to pass a 120-day extension on the legal deadlines in light of the growing public health crisis. But in July, the administration abruptly changed its stance, around the same time Trump issued a now-court-blocked memorandum to exclude undocumented immigrants from the apportionment count.

The Census deadline has since been cut short one month from the previously approved plan of Oct. 31. Recent Republican proposals for coronavirus relief included $448 million in funding for the Census but no additional time to conduct the survey. On Monday, the Inspector General’s office at the U.S. Department of Commerce—tasked with overseeing the Census Bureau—released a report stating “the accelerated schedule increases the risks to obtaining a complete and accurate 2020 Census.”

What happens if the Census doesn’t reach its target of reporting 99% of the population ahead of the deadline? According to the report, not even “senior Bureau officials know what will occur.” The report adds that if the goal isn’t reached, it must be decided to either continue data collection after the deadline—or use the data it has already collected for decision-making.

“There are risks either way,” the report states. “If data collection ends before 99% completeness is met in every state, the Bureau will not achieve what it views as an acceptable level of accuracy and completeness. But, if data collection extends beyond Sept. 30, 2020, that will either further condense an already compressed schedule for data processing—which carries its own risks—or the Bureau will miss the December 31, 2020, statutory deadline,” (the date in which the numbers must be presented to the President).

Additionally, internal Bureau emails and memos shared between senior officials—released last weekend due to a federal lawsuit in California—state that shortening the collection deadline down to Sept. 30 to meet the Dec. 31 statutory deadline “will result in a census that has fatal data quality flaws that are unacceptable for a Constitutionally-mandated national activity.”

Attorneys for the Justice Department, according to NPR, maintain that Congress is the only authority that can step in and resolve the problem. But legislation has failed to pick up steam thus far, despite a recent bipartisan Senate effort to push the tallying deadline back to Oct. 31. It remains to be seen if any such legislation will pick up momentum in time; Congress is currently attempting to find agreement on another COVID stimulus package ahead of break in early October.

On Tuesday, the Bureau reported that more than 95% of U.S. households have been tallied so far in the Census. Roughly 30% were counted from field Census takers, while 66% of respondents submitted information online or via phone or mail. Still, 17 states currently lag behind a 95% total response rate, which Census officials clearly believe is enough to dramatically skew the results of the effort. Louisiana, Montana, and Alabama have the worst rates of response at 90.4%, 90.3%, and 89.1%, respectively. West Virginia, Idaho, and Hawaii sit at the top with 99.8%, 99.8%, and 99.5%, respectively.

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PSEi flat as market anticipates new restrictions

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By Denise A. Valdez, Senior Reporter

PHILIPPINE SHARES continued moving sideways on Wednesday as investors started taking into consideration the expiration of current quarantine measures in the country towards the end of the month.

The benchmark Philippine Stock Exchange index (PSEi) closed flat, shedding 1.56 points or 0.02% to end at 5,892.72. The broader all shares index was, likewise, flat, posting a 1.21-point or 0.03% uptick to 3,545.14.

The main driver of sentiment remains to be the coronavirus disease 2019 (COVID-19) situation in Europe, where cases have surged in the past days, said Darren T. Pangan, trader at Timson Securities, Inc.

COVID-19 cases in Europe swelled 5,331 to 4.54 million as of Wednesday, prompting new restrictions to contain the fresh virus outbreak in the region. Britain has announced tighter restrictions on Tuesday, which Prime Minister Boris Johnson said may last up to six months.

“Locally, investors may be weighing the government’s decision on the quarantine measures to be enforced after the month of September,” Mr. Pangan said in a text message.

The relaxed quarantine restrictions currently in place in Metro Manila and nearby cities are set to last until the end of the month. By October, the government will announce a new set of restrictions, which may tighten, relax or maintain current protocols.

“The general sentiment remains cautious, despite the daily improvement in economic activity. There is some concern that without additional mobility, with the easing of restrictions on public transportation as well as reopening of tourism focused industries, economic activity may be at its peak,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in an e-mail.

Timson Securities’ Mr. Pangan said the PSEi’s nearest support area is 5,750, and resistance is 6,100. AAA Southeast Equities’ Mr. Mangun expects the PSEi to continue lower in the remaining two days of the week.

Four of six sectoral indices recorded losses on Wednesday’s closing. Mining and oil dropped 63.35 points or 1.05% to 5,944.54; services trimmed 8.69 points or 0.59% to 1,446.72; property lost 10.62 points or 0.38% to 2,733.81; and financials dipped 0.07 point or less than a percent to 1,142.48.

The two gainers were industrials and holding firms. Industrials improved 68.46 points or 0.87% to 7,872.45, while holding firms picked up 11.63 points or 0.18% to 6,158.34 at the end of session.

Value turnover slipped to P4.45 billion on Wednesday from P4.63 billion the previous day. Some 1.47 billion issues switched hands.

Advancers beat decliners by two, 92 against 90, while 56 names ended unchanged.

Foreign investors were net sellers for the ninth straight day, but net outflows declined to P95.86 million from P655.13 million the previous day.



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