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2 “Strong Buy” Stocks With Heavy Short Interest

Right now, markets are giving investors opposing trends simultaneously. The S&P and NASDAQ have posted strong year-to-date gains. At the same time, however, Wall Street strategists are growing more concerned that
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Right now, markets are giving investors opposing trends simultaneously. The S&P and NASDAQ have posted strong year-to-date gains. At the same time, however, Wall Street strategists are growing more concerned that a slowing U.S. economy could derail the stock market’s record run. It’s an environment full of risk, and so risk-friendly investors are finding plenty of options – including short trading.

Short trading is betting on the risks to play out; it’s buying into a position using borrowed shares, so that the trader is on the hook for an original purchase price. He gains a profit by closing the position and buying the originally borrowed shares; if the price has fallen since the short trade began, the investor will profit on the difference in share price.

Despite the high risk factors – especially in a generally rising market environment – short trading remains a popular strategy for short-term investors.

With this in mind, we turned our attention to two stocks that have been heavily shorted in recent months, and we’ve used the TipRanks database to find out just where they stand. The results are interesting – these are Strong Buy stocks with notable support from Wall Street analysts. Could a short squeeze be in the cards for these two tickers? Let's take a closer look.

Corsair Gaming (CRSR)

We’ll start in the gaming sector, where Corsair is a major developer, manufacturer, and supplier of high-end PC gaming gear. The company markets a range of peripherals, streaming equipment, smart ambient lighting, headsets, and more to gamers of all stripes, as well as content creators, hobbyists, and PC enthusiasts. In addition to peripherals, the company also offers computer gear such as case cooling, power supply units, memory chips, and solid state drives. Corsair’s products are sought after by both casual gamers and professional players.

Corsair saw a mix of headwinds and tailwinds during the pandemic crisis last year, as lockdowns and social distancing pushed demand up faster than the supply networks could keep up. Even so, the company went public in September 2020, in an event that saw 14 million shares go on the market at an initial price of $17 each. The company raised $238 million in gross proceeds from the offering.

In early August, Corsair announced its 2Q21 quarterly results, its fourth such report since going public. The $472 million in revenues were down 9.8% sequentially, but up 24% year-over-year. EPS came in at 28 cents; this was the lowest reported value since the IPO, but was up from 26 cents in the year-ago quarter. Supply constraints as well as logistics issues have weighed on both the top-line and margins.

With all of that in the background, the company has seen a great deal of short interest. More than 30% of recent activity on the stock has been in short trades.

Wedbush analyst Michael Pachter acknowledges Corsair's headwinds, especially the "margin pressure" and its impact. He does, however, come down squarely with the bulls regarding the company’s path forward.

“Corsair has created a defensible niche in what otherwise may appear to be a commodity business. Unlike many of its larger competitors, Corsair is firmly focused on the gaming segment, with the vast majority of its sales coming from a small, but dedicated and growing base of hard core gamers. Corsair is likely to average 10% top line growth for the next several years... There is potential for substantial upside to our estimates if Corsair can deliver operating leverage," Pachter opined.

Pachter’s $45 price target implies a one-year upside of 54%, and supports his Outperform (i.e. Buy) rating. (To watch Pachter’s track record, click here.)

Overall, it seems that Wall Street is in agreement with the Wedbush view. This stock has a 3 to 1 breakdown of Buys versus Holds, making the analyst consensus a Strong Buy. The shares are priced at $29.20 and their $39 average price target suggests room for ~34% growth in the year ahead. (See CRSR stock analysis on TipRanks)

Heron Therapeutics (HRTX)

Next up, we’ll look at Heron Therapeutics, a biopharmaceutical company with a focus on easing the discomfort suffered by cancer patients as a result of current chemotherapy treatments. Heron has developed drugs to treat both the nausea and pain frequently experienced by cancer patients, with the aim of improving quality of life during treatment.

In this niche, Heron has hit a jackpot – and has three approved drugs on the market. Sustol and Cinvanti have both been approved for nausea control and are on the market. The company realized $42.5 million in combined sales from these drugs during 1H21; this was down from $49.1 million in the first half of 2020. Demand for Cinvanti increased 22% from Q1, and for Sustol by 108%. These gains were partially offset by lower selling prices. The company expects Q3 sales of these drugs to increases between 5% and 10% sequentially.

Heron saw a major catalyst in May of this year, when Zynrelef, a pain management drug, received FDA approval for commercialization. The company has already made an agreement with Medicare for a temporary billing code on the drug, and has commitments from ‘multiple payers covering over 86 million commercial and Medicaid lives’ for reimbursements on Zynrelef. Zynrelef is also approved in 31 European countries.

Even though Heron has started building a solid sales base, the stock has attracted significant short interest, on the order of 28.8% of recent trading activity.

Cantor analyst Brandon Folkes sees further growth ahead for this stock, writing: “We continue to believe HRTX stock offers investors a favorable risk/reward at current levels. We remain bullish on the peak sales potential for Zynrelef, even if we expect a measured launch near term. The chemotherapy-induced nausea and vomiting (CINV) franchise continues to grow, albeit at a revised trajectory. With this growth in the CINV franchise [and] strong early Zynrelef launch metrics… we believe the company will drive value for investors…”

These bullish comments back up an Overweight (i.e. Buy) rating, and a $26 price target that implies an upside potential of ~118% over the next 12 months. (To watch Folkes’ track record, click here)

Folkes is no outlier in his views of Heron; the company has picked up 4 positive reviews recently, making the Strong Buy consensus rating unanimous. The shares are trading for $11.91 and have an average price target of $27.50, suggesting a robust upside of 131%. (See HRTX stock analysis on TipRanks)

To find good ideas for 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.

The post 2 "Strong Buy" Stocks With Heavy Short Interest appeared first on TipRanks Financial Blog.

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As inflation fears spike, 1build raises $14M to help construction firms optimize their cost estimates

It’s an extraordinarily exhausting time to estimate costs in the construction industry. Lumber prices skyrocketed during the post-pandemic construction spree, only to come hurtling back down to Earth in recent weeks. Copper, concrete, and steel have…

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It’s an extraordinarily exhausting time to estimate costs in the construction industry. Lumber prices skyrocketed during the post-pandemic construction spree, only to come hurtling back down to Earth in recent weeks. Copper, concrete, and steel have also seen wild price swings as supply chain breakages, workers shortages, border restrictions and more plague price stability.

Construction is among the world’s largest industries, with firms planning and building projects valued at trillions of dollars at pretty much any time. Yet, it’s also one of the most archaic industries, with a heavy reliance on paper even as IT has increasingly filtered into more of the industry’s processes. Paper though can’t match the extreme volatility in materials and labor happening today, and that means construction firms need better and more real-time software tools to handle cost estimates.

1build has a bold vision to own not just cost estimating, but everything that it takes to get a building under construction. “We are going to occupy the whitespace niche of pre-construction — your planing, your estimating, up until you break ground on your building,” CEO and founder Dmitry Alexin said.

Alexin had been scouting around for startup ideas in the real estate sector in 2018 and 2019, having previously worked in finance. He worked briefly at a stealth startup in the space, where he “helped to select real estate with data science.” He discovered a problem when it came to modeling the development of a property though: it wasn’t easy to determine what could be built or how much it would cost. “I just assumed you can just use an API to figure out the cost to build,” he said.

That led him into the rabbit hole that is the math of the construction industry. He discovered “this analog industry … three times as large as ecommerce and still in this offline, non-digitized way to consume,” he said. He wanted to automate more of these processes, but even that ran into challenges. “When I was forming 1build, it was creating a data standard for the construction industry,” he explained. Eventually, he zeroed in on cost estimating.

Alexin is a solo founder, who has since built up a management team around him. He and a few early employees joined the YC Winter 2020 batch, where 1build was identified as one of TechCrunch’s 20 most exciting startups in the batch out of several hundred (the company was my selection).

The startup’s timing, though, was horrific. “COVID happened right as we were graduating,” Alexin said. The company suffered a “50% reduction in usage in the first 30 days.” The company was still small and it hunkered down, but then something surprising happened: the construction industry just zoomed forward as millions of people moved to new homes and offices with the rise of remote work.

The company raised a previously undisclosed $5.5 million seed round from Initialized Capital and kept building. It focused on building a single platform (that’s the “1build”) around all aspects of estimating costs and handling the planning phase of construction. It’s “almost an experience that feels like interacting a spreadsheet, but we pull in the latest materials rate, the latest labor rates,” Alexin said. From there, you can “develop your estimate yourself, line item by line item.” He says that integrating all construction planning in one location can massively save time and money, and is particularly valuable for smaller contractors and construction firms who don’t have the scaled-up planning teams of their larger brethren.

1build’s team, with CEO and founder Dmitry Alexin sitting in center of first row. Image Credits: 1build

Alexin said that subscription revenues have risen 7x in the past 10 months, and 10x since April when we talked a few weeks ago. That excitement led it to a quick, $14.5 million Series A led by Brent Baltimore at Greycroft. Alexin said that Baltimore has been engaged in construction tech for a long time, and said that “we felt that they were the one firm that understood what we are doing.”

The team, as is typical these days, is spread out, with the majority in the U.S. and others in Canada and Europe.

1build wants to be the one stop for the construction industry, and hopes that the industry standardizes on a universal set of data formats. “The more and more builders that adapt that, the more we can build into the product,” he said.

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Long COVID: double vaccination halves risk of developing long-lasting symptoms

Want to avoid long COVID? Get vaccinated.

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Studio Romantic/Shutterstock

In unvaccinated people, around one in 20 who get symptomatic COVID-19 experience symptoms for at least eight weeks. Around one in 50 have symptoms that drag out for three months or more.

We wanted to know whether COVID-19 vaccines might protect against developing long-lasting symptoms. To find out, we looked at data provided by more than a million regular contributors to the COVID Symptom Study, a project in which members of the public log their symptoms via an app to help with research.

Our latest analysis of the study’s data, covering around 2 million vaccine doses, shows that vaccines significantly reduce the risk of catching COVID-19, with only 0.2% of those fully vaccinated later testing positive for the virus.

Even if you’re unlucky enough to catch the virus after being vaccinated, your chances of falling seriously ill or dying are slashed. Double-vaccinated people are 31% less likely to experience acute COVID-19 symptoms and 73% less likely to be hospitalised – a result that’s borne out in the relatively low hospitalisation and death rates we’re seeing now even as tens of thousands of people are still testing positive every day in the UK.

Reassuringly, for those who did fall ill with COVID-19 after being vaccinated, only around 5% went on to have symptoms that lasted for more than four weeks, meaning their chances of developing long COVID were cut by half. One of the best ways to reduce your risk of getting long COVID is to get fully vaccinated as soon as possible.

However, we did notice that frail older people and those living in more socially deprived areas were more likely to be infected and fall ill with COVID-19 after being vaccinated, especially if they had only had one vaccine dose. This suggests that we should prioritise further vaccination efforts and public health measures such as masking and social distancing among these groups, especially where infection rates are high and people are mixing and moving around.

Vaccines and long COVID

As the UK vaccination programme rolled out, we also started to notice anecdotal reports from people living with long COVID that their symptoms seemed to improve after being vaccinated.

The patient-led LongCovidSOS group chose to investigate this by surveying over 800 long COVID patients early in 2021. More than half of those surveyed noticed an overall improvement in their symptoms after vaccination, which then appeared to be sustained in about half of this group. Around a quarter of the overall respondents reported no difference and one-fifth said their symptoms had got worse. These findings have been released as a preprint, so haven’t yet been reviewed by other scientists, but they’ve been backed up by data from the COVID Symptom Study, which we’ll be publishing soon.

However, while there does seem to be some kind of link between receiving a COVID-19 vaccine and improvements in long COVID, it’s not clear exactly how the two are connected. It could be that the immune response triggered by the vaccine has a direct impact on symptoms.

Alternatively, it could just be that time has continued to pass since these people were originally infected and they’re experiencing a natural recovery from the virus. Or it could be a bit of both. Either way, more research is needed to tease out what’s going on.

A woman with long COVID lying on a bed, covering her face
There isn’t a definitive answer yet on whether vaccines can relieve people’s long COVID symptoms. True Touch Lifestyle/Shutterstock

What we can say is that COVID-19 vaccines certainly aren’t harmful for people with long COVID. What’s more, because we know that it’s possible to be reinfected with the virus, there’s a risk that catching it a second time could exacerbate symptoms for people living with long COVID and set them back even further. It’s therefore vital that we encourage anyone with long COVID who has not been vaccinated to do so as soon as possible, to help protect themselves and those around them.

A serious threat

Although the chances of developing long COVID after being vaccinated are small, this is a numbers game and a small percentage of a big number can still be substantial. As long as we are seeing tens of thousands of cases every day, we can still expect to see a substantial number of people living with lingering symptoms over the coming months.

This is particularly important for younger people, who may be less worried about hospitalisation or death, yet who can still be susceptible to the debilitating long-term effects of the virus. A lot can happen in a few months when you’re young, and long COVID can mean that people miss out on life-changing opportunities, like sitting an exam or taking up a new job, as well as the social activities that bring joy and wellbeing to life.

It’s likely that we’ll all be living with COVID-19 for some time to come. But with a combination of vaccination and public health measures where necessary, we can help to make sure that as few people as possible have to directly live with its life-limiting long-term effects.

The Conversation

Claire Steves consults for ZOE Ltd which is the company which developed the COVID Symptom Study together with King's College London. She receives funding from the Medical Research Council, the National Institute for Health Research, the Wellcome Trust and Chronic Disease Research Foundation.

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Airbnb Stock: Where it is Headed?

The rebound in travel amid the acceleration in vaccination rate and easing stay-at-home measures has given a solid boost to companies providing travel and lodging-related services, including Airbnb (ABNB). Thanks
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The rebound in travel amid the acceleration in vaccination rate and easing stay-at-home measures has given a solid boost to companies providing travel and lodging-related services, including Airbnb (ABNB).

Thanks to the improving operating environment, shares of Airbnb are on the move, gaining nearly 18% in one month. This growth is backed by the company’s robust financial performance, even when compared to its pre-pandemic levels. (See Airbnb stock charts on TipRanks)

It’s worth noting that Airbnb achieved its highest gross nights booked (nights booked before cancellations and alterations) in Q2 2021. Further, its gross bookings (GBV) of $13.4 billion were about 37% higher than in Q2 2019 (pre-COVID levels).

Thanks to the strong bookings, Airbnb’s top-line surged nearly 300% year-over-year. Also, it was 10% higher than the pre-pandemic levels. Airbnb noted that its adjusted EBIDTA improved, while its net loss narrowed. 

Despite the strong quarterly performance, investors who hold portfolios on TipRanks continue to reduce their holdings. For instance, TipRanks’ Stock Investors tool indicates that investors currently have a Very Negative outlook on Airbnb stock, with 5.4% of investors who hold portfolios on TipRanks decreasing their exposure over the past month. 

Investors’ pessimism over Airbnb stock likely stems from the rising cases of the coronavirus. The contagious delta variant of COVID-19 could dent Airbnb’s prospects in 2021. I maintain a Neutral view on Airbnb stock.

In fact, Airbnb stated that the “COVID-19 and the introduction and spread of new variants of the virus, including the Delta variant, will continue to affect overall travel behavior.” The company expects “year-over-year comparisons for Nights and Experiences Booked and GBV will continue to be more volatile.” 

Airbnb projects its Q3 2021 Nights and Experiences Booked to be lower than Q2 2021 and pre-COVID levels. However, a strong GBV backlog will likely fuel strong growth in revenues and adjusted EBITDA in Q3.

Ivan Feinseth of Tigress Financial termed the Delta variant a concern. However, Feinseth maintained his Buy rating on Airbnb stock and has a price target of $206 that suggests a 21.7% upside potential. 

Overall, on TipRanks, ABNB stock has an analyst rating consensus of Moderate Buy, based on 14 Buys, 7 Holds, and 1 Sell. The average Airbnb price target of $178.91 implies 5.7% upside potential to current levels.

Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

The post Airbnb Stock: Where it is Headed? appeared first on TipRanks Financial Blog.

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