For Immediate Release
Chicago, IL – December 28, 2021 – Zacks Equity Research Shares of The Goldman Sachs Group, Inc. (
GS Quick Quote GS - Free Report) as the Bull of the Day, GameStop Corp. ( GME Quick Quote GME - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Repligen Corporation ( RGEN Quick Quote RGEN - Free Report) , Sarepta Therapeutics, Inc. ( SRPT Quick Quote SRPT - Free Report) and BeiGene, Ltd. ( BGNE Quick Quote BGNE - Free Report) . Here is a synopsis of all five stocks: Goldman Sachs has solidified itself as the gold standard on Wall Street, navigating the choppy pandemic waters with a level of operational perfection that no other major financial institution could match. Following the recent valuation compression, GS is poised to take flight in 2022 and is one of my top picks going into the new year (with many other investment professionals in agreement).
Sell-side analysts are getting increasingly optimistic about the future of Goldman Sachs, pushing up their EPS estimates after a blowout Q3 report, propelling GS into a Zacks Rank #2 (Buy).
Goldman seized on the opportunities that each stage of the devastating pandemic presented. GS drove record trading profits from the market capitulation of March 2020, attained excellent portfolio returns for its high wealth thereafter, and has been one of the biggest beneficiaries of the record IPO & M&A frenzy we've seen over the past 12 months or so (and this dealmaking euphoria is expected to spill into 2022).
This global investment leader has demonstrated its ability to effectively adapt to the continuously evolving financial conditions as we enter the digitally-fueled Roaring 20s.
Goldman's Q4 earnings release is on the top of the 2022 January docket, with its full year report expected to be released January 18th (before the opening bell). In the past 6 quarterly releases GS has knocked analysts' consensus EPS estimates out of the park by no less than 50% (averaging 66%) while exceeding revenue expectations by an average of roughly 30%.
Despite analysts ' seemingly perennial upward estimate revisions, I see no reason this outsized estimate beating trend wouldn't continue in 2022 as rising interest rates expand Goldman's already record margins even further.
Goldman Sachs is the captain of high finance and the banking sector's knight in shining armor. The firm is known for its quick opportunity seizing trading actions and best-in-class investment banking operations. A record volume of IPOs, bond offerings, and M&A activity have powered this business's top and bottom-line to incredible levels that have consistently blown analysts' estimates out of the water.
David Solomon has proven himself at the helm of this remarkable Wall Street titan, driving top and bottom-line results that have dwarfed any pre-pandemic figure. Since Solomon was named CEO and Chairman of Goldman Sachs on October 1st, 2018, GS shares are up over 60%. This may not sound like a lot, but GS has navigated the 2018 year-end sell-off and the most significant economic contraction since The Great Depression.
GS had a premier year with an over 60% 10-month year-to-date rally, which peaked at the beginning of November, but a recent correction from that high has presented us with an excellent entry point. The cushy 2.1% dividend yield that this stock offers its shareholders, should provide even the most risk-averse investors with the comfort to add this investment leader to their portfolio's financial holdings.
The dealmaking king is looking at a consensus price target north of $450 a share (some targets as high as $600), with analysts getting increasingly bullish on a seemingly weekly basis. 11 out of 16 analysts are calling GS a buy today with 0 selling ratings.
GameStop has become an allusive public security that trades outside the realm of fundamental investing. GME has turned into a betting instrument for young Robinhood traders and hedge funds alike. Its bloated $11.3 billion market valuation doesn't appear to reflect this dying brick-and-mortar fundamentals or even future performance.
meme stock of the year failed to unveil the systemic restructuring plans that overzealous investors were hoping for in its latest quarterly report (12/8), more bearish calls on the stock pushed GME into a Zacks Rank #5 (Strong Sell). The r/WallStreetBets Revolution
The rise of r/WallStreetBets (WSB) and their "Occupy Wall Street" mentality have proven an unprecedented ability to take down short-selling hedge funds with nothing more than a handful of memes. The groupthink-powered market-moving force that WSB has demonstrated to the market has instilled fear in short-sellers everywhere.
WSB catalyzed a paradigm shift in public equities at the beginning of 2021 when this fragmented options-juiced message board managed to rally millions of nostalgia-ridden freshman traders into GameStop in a short-squeeze for the history books.
r/WallStreetBets and the GameStop Saga proved that retail investors are no longer just the little guys and should be taken as seriously as any hedge fund.
GameStop, an antiquated brick-and-mortar video-game retailer on the edge of bankruptcy, skyrocketed 2,700% in January of 2021, from $17.25 a share on the first trading day of the year to an intraday high of $483 on January 28th. WSB traders started getting 'bullish' about their childhood Eden when activist investor and founder of Chewy, Ryan Cohen, decided to take on an active role in the company's "restructuring" (still yet to be seen).
This extraordinary price action was driven by a combination of short-term call options from WSB traders, which generated a leveraged upside on GME as market makers (in which most of these contracts originate) were obligated to buy more shares to hedge their delta-equivalent positions as the stock soared (gamma-squeeze), while short-sellers were forced to buy back their shorted stock at a much higher price to avoid losing more than they could afford (short-squeeze).
Individual investors have never been provided with this level of accessibility to options, a financial derivative previously reserved for "knowledgeable" investors. This high-risk tool has been utilized by freshman traders who have seen many more casualties than winning lottery tickets. Nevertheless, I see the GameStop Saga as an excellent learning experience for freshman and veteran traders alike.
However, GME has since turned into a gambling tool for momentum traders rather than a fundamentally driven stock.
There is nothing fundamental backing GME's over $11 billion valuation, with the company's quarterly losses only seeming to accelerate each quarter as its antiquated business model fails to adapt. GameStop managed to take advantage of its rich stock price by raising capital in a secondary equity offering. As of now, this additional funding is just burning a hole in its pocket. The company hemorrhaged over $300 in cash flows this past quarter. If this type of unexplained spending continues, it's only a matter of quarters before GME will be looking for bankruptcy protection.
Additional content: 3 Biotech Stocks Worth Adding to Your Portfolio for Next Year
The volatile biotech sector had a roller coaster ride in 2021 but the rapid development of vaccines and antibody treatments for COVID-19 kept it in the spotlight. While the performance of the overall sector has been on the downside year to date, the emergence of the deadly variants of COVID-19 should keep the sector in focus going forward.
Companies like Moderna, which developed vaccines in record time, are in continued focus and the massive surge in its share price fueled the overall sector despite the headwinds. This trend is expected to remain with booster doses of the vaccines becoming the need of the hour.
Even though the bigwigs of the sector face challenges as sales of established drugs take a hit due to a slowdown and increased competition, new drug approvals are likely to maintain the momentum. The regulatory nod to Biogen’s Alzheimer's disease (AD) drug Aduhelm propelled the entire sector. The approval also brought other companies to notice that are developing drugs for AD and investors are optimistic about the prospects of these pipeline candidates.
The pace of mergers & acquisitions had slowed down in 2021 from the previous years’ levels. However, as the economic scenario improves, mergers and buyouts should pick up the pace as pharma/biotech bigwigs eye lucrative acquisitions to bolster their portfolio/pipeline and combat the rivalry woes.
Merck recently acquired the rare diseases-focused company Acceleron Pharma. Pharma giant Pfizer recently announced that it will acquire Arena Pharmaceuticals, Inc. for $6.7 billion. While oncology and immuno-oncology are the key areas of focus, treatments for rare diseases and gene-editing companies also look promising with great potential, thereby making these lucrative areas of investment.
However, given the uncertain economic environment, the inherent risks of the sector get intensified. In such a scenario, choosing a biotech stock for investment can be tricky. Particularly, smaller biotechs are riskier as their product pipelines are several years away from commercialization.
Here we zero in on three biotech companies, which hold enough room for an upside, backed by strong fundamentals. These stocks currently carry a Zacks Rank #2 (Buy). You can see
. the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here 3 Biotech Stocks to Bet on in 2022 Repligen Corp., a global sciences company, provides bioprocessing technologies and solutions used by large biopharmaceutical companies and contract manufacturing organizations for manufacturing biologic drugs, such as monoclonal antibodies (mAbs) and gene therapies. RGEN experienced a buoyancy in demand, driven by strong COVID-induced tailwinds. Revenues from gene therapy customers also bumped up the top line. The momentum should continue in 2022 as well.
Repligen made a few promising acquisitions to diversify its business or boost its core competencies. These buyouts are significantly boosting RGEN’s top line, a trend anticipated to continue.
Shares of Repligen have surged 38.1% in the year so far against the
industry's decline of 19.6%. Sarepta Therapeutics primarily focuses on developing exon-skipping drug candidates targeting Duchenne muscular dystrophy (DMD), a rare genetic disorder affecting children (primarily males). SRPT commercializes three products, namely Exondys 51 (indicated for treating DMD in patients with a confirmed mutation of the dystrophin gene that is amenable to exon 51 skipping), Vyondys 53 (indicated for the treatment of DMD in patients with a confirmed mutation of the dystrophin gene amenable to exon 53 skipping) and Amondys 45 (indicated for treating DMD in patients who have a confirmed mutation of the dystrophin gene amenable to exon 45 skipping).
EXONDYS 51 witnessed impressive growth and this momentum should continue. The uptake of the other two products has also been encouraging so far and should further fuel growth in 2022. SRPT is conducting a confirmatory study on the clinical benefits of these drugs for gaining continued approval. The same is also looking to build its DMD pipeline beyond PMO-based exon-skipping treatments.
While the share price declined significantly earlier in the year following a pipeline update on Sarepta’s gene therapy candidate SRP-9001, strong demand for its commercial DMD drugs and a promising pipeline progress bode well for 2022.
The stock has rallied 13.4% in the past six months.
BeiGene commercializes a range of oncology medicines in China licensed from Amgen and Bristol Myers Squibb. BGNE currently has the three following approved drugs in the portfolio: BTK inhibitor Brukinsa in the United States, China, the EU, Canada, Australia, the United Kingdom and additional international markets; the non-FC-gamma receptor binding anti-PD-1 antibody tislelizumab and the PARP inhibitor pamiparib in China. It also has a broad portfolio of more than 40 clinical candidates. BGNE is making good pipeline progress through strategic collaborations as well.
Solid demand for its approved drugs and an encouraging pipeline progress should enable BGNE to sustain the momentum.
Shares of BeiGene have gained 4% in the year so far.
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