The stock market is heating up, and some Wall Street bulls are turning even more positive. Among those adapting an increasingly bullish approach is Stifel’s Head of Institutional Equity Strategy, Barry Bannister, who believes the worst is behind us, freeing up the S&P 500 to continue its ascent. Previously calling for an aggressive rebound right before the market’s March lows, he now projects that by the end of August, the S&P 500 will hit 3,250, reflecting an 8% rise from current levels.
“We now raise our S&P 500 price target to 3,250 by Aug-30, 2020 (in 3 months), supported by economic survey data improving/bottoming (consumer, services, industrial) and our expectation that the S&P 500 price-to-earnings expands (at prevailing low real bond yields) to offset weak earnings per share, typical of late-stage recession periods,” Bannister wrote in a note to clients.
Bearing this in mind, some investors are on the hunt, looking to snap up compelling names before shares re-embark on an upward trajectory. For the more risk-tolerant, focus has locked in on penny stocks, or tickers trading for less than $5 per share. The appeal is clear; the bargain price tag means you can get more bang for your buck and even what feels like inconsequential share price appreciation can result in huge percentage gains.
What’s the flip side? Minor share price depreciation can fuel major percentage losses. By nature of these massive movements, penny stocks are notoriously volatile.
With an understanding of the risk at play, we used TipRanks’ database to pinpoint three penny stocks in the healthcare sector supported by the Street’s analysts, with each receiving enough bullish calls to earn a “Strong Buy” consensus rating. Not to mention each offers up massive upside potential.
Vascular Biogenics (VBLT)
Using its three platform technologies that enhance natural physiologic and genetic regulatory elements, Vascular Biogenics develops first-in-class treatments for cancer. With a key catalyst expected in the third quarter of this year, several analysts believe that at $1.15 apiece, now is the time to pull the trigger.
The company has recently announced that data from the second interim assessment of efficacy for the Phase 3 OVAL study of its VB-111 candidate in platinum-resistant ovarian cancer patients will come in Q3, with the DSMC analysis set to evaluate 100 patients for survival after at least three months of follow-up.
Writing for Oppenheimer, five-star analyst Kevin DeGeeter says that after having discussions with KOLs, he thinks the absolute mortality in both arms will be relatively high, landing within the range of 30-40% in the first three months of follow-up for advanced ovarian cancer patients.
Expounding on the implications of the study, DeGeeter stated, “In terms of interim assessment for OVAL, we view the update as an incremental step in evaluating the efficacy of VBL-111 with likely broad statistical intervals for futility. As such, we view risk of stopping the study for futility as low.”
On top of this, DeGeeter expects preclinical data from the MOSPD2 bi-specific antibody program to be presented at AACR on June 22-24. Abstracts for the meeting were released on May 15. This data release is especially significant as it’s an important step when it comes to expanding VBLT's pipeline, in the analyst’s opinion. He added, “We view acceptance of preclinical MOSPD2 data for a late-breaking abstract as an important validation of the novel scientific approach.”
Looking more closely at MOSPD2, the protein, which is found on the surface of monocytes, neutrophils and lymphocytes, could stimulate myeloid cell migration. It should be noted that MOSPD2 is expressed on the surface of multiple tumor cell types and can promote tumor cell invasion. “Based on our review of the literature, VBLT appears to have one of the most advanced cancer programs against this novel target,” DeGeeter commented.
To this end, DeGeeter reiterated his Outperform (i.e. Buy) rating on VBLT along with a $2.50 price target. Should this target be met, a twelve-month gain of 117% could be in store. (To watch DeGeeter’s track record, click here)
Like DeGeeter, other analysts also take a bullish approach. VBLT’s Strong Buy consensus rating breaks down into 5 Buys and no Holds or Sells. The $3.85 average price target is more aggressive than DeGeeter’s, with the upside potential coming in at 235%. (See VBLT stock analysis on TipRanks)
Lineage Cell Therapeutics (LCTX)
Focused on designing innovative cell therapies, Lineage Cell Therapeutics uses a cell-based therapy platform to develop differentiated cells to support or replace cells that are dysfunctional due to degenerative disease or traumatic injury. Currently going for $0.91 apiece, some members of the Street believe the share price reflects an attractive entry point.
Weighing in for H.C. Wainwright, 5-star analyst Joseph Pantginis tells investors that he has high hopes following LCTX’s recent data release. Earlier this month, the company published updated results from its Phase 1/2a study of OpRegen as a treatment of dry-AMD. Representing an exciting development, the results reported are the first of improved visual function recorded in the first patient enrolled in cohort 4 and treated with the Orbit SDS with thaw-and-inject formulation (TAI), the trial’s exploratory goal.
Expounding on this, Pantginis said, “Importantly, the results confirmed and expanded prior observations of safety and improved vision upon treatment with OpRegen. Specifically, the data show meaningful improvements in the progression of geographic atrophy (reduction), visual acuity, and reading speed. In addition, the results reinforce a growing body of evidence that OpRegen is well-tolerated and can provide sustained and clinically meaningful benefits with a single dose of RPE cells.”
Taking a more in-depth look at the study, cohort 4 included five patients treated with one of two formulations of OpRegen. The first three were given a formulation of OpRegen that required plating and preparation of cells one day prior to use and retinotomy, while the others were treated with Orbit SDS TAI. According to Pantginis, the results not only produced a “significant and durable improvement in visual function”, but also underscored the differences between the formulations. Not to mention the OpRegen with TAI via Orbit SDS formulation was found to be safe.
If that wasn’t enough, LCTX announced that it is applying for grant funding from the California Institute for Regenerative Medicine (CIRM) to support its development of a prophylactic vaccine against COVID-19. Even though IND enabling work including the creation of a specific expression construct and manufacturing process will be necessary, Pantginis argues that LCTX’s non-dilutive funding strategy and “solid scientific rationale at the basis of the technology” de-risk the strategy.
Based on all of the above, Pantginis reiterates a Buy rating on LCTX along with a $4 price target. This suggests upside potential of a colossal 340%. (To watch Pantginis’ track record, click here)
All in all, other analysts echo Pantginis’ sentiment. 3 Buys and no Holds or Sells add up to a Strong Buy consensus rating. Given the $3.67 average price target, the upside potential lands at 299%. (See LCTX stock analysis on TipRanks)
Onconova Therapeutics (ONTX)
Last but not least we have Onconova Therapeutics, which develops small molecule drug candidates to treat cancer. With a price tag of only $0.39 per share and a major potential catalyst coming up in the second half of the year, it’s no wonder this stock is on Wall Street’s radar.
Part of the excitement surrounding ONTX is related to the data readout for the now fully enrolled pivotal Phase 3 INSPIRE study in high-risk myelodysplastic syndrome (MDS) patients. The study is evaluating IV rigosertib (RAS-mimetic) in patients who are under the age of 82 with high-risk MDS that have failed HMA therapy within nine months or nine cycles.
Speaking to the data readout’s significance, Maxim analyst Jason McCarthy stated, “The Phase 3 INSPIRE result in 2H20 is a binary event for ONTX shares, in our view. Given the removal of any financing overhang (with recent equity raises to strengthen the balance sheet), the data, if positive, will be transformative for the company, with strategic partners likely to take note as well as provide solid footing for the second intended Phase 3 study with rigosertib thereafter.”
Also important to consider, the company has two chances to receive approval. “Key to remember is that the trial was designed with two shots on goal: either to reach p-value in the intent-to-treat (ITT) patients or the very-high-risk (VHR) subset. Patients with VHR have a life expectancy of six months, and ~65% of the patients enrolled are VHR. Given what we saw in the ON-TIME subgroup, we believe the probability of success favors both scenarios,” the 5-star analyst commented.
Additionally, McCarthy cites other possible catalysts slated for 2020 including the start of enrollment for the Phase 1/2a KRAS-mutated lung cancer study (IST) of rigo and nivolumab, ON 123300’s IND submission to the FDA and trial initiation as well as the initiation of the combination study for oral rigo and azacytidine in HMA-naïve higher-risk MDS patients.
With everything ONTX has going for it, it should come as no surprise that McCarthy joined the bulls. In addition to upgrading his rating from Hold to Buy, he put a $1.25 price target on the stock. This target conveys his confidence in ONTX’s ability to skyrocket 221% in the next year. (To watch McCarthy’s track record, click here)
Turning now to the rest of the Street, other analysts are on the same page. With 100% Street support, or 3 Buy ratings to be exact, the message is clear: ONTX is a Strong Buy. The $1.65 average price target brings the upside potential to 323%. (See ONTX stock analysis on TipRanks)
To find good ideas for penny stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
The post 3 "Strong Buy" Penny Stocks That Offer Massive Potential Gains appeared first on TipRanks Financial Blog.
Las Vegas Strip faces growing bed bug problem
With huge events including Formula 1, CES, and the Super Bowl looming, the Las Vegas Strip faces an issue that could be a major cause for concern.
Las Vegas beat the covid pandemic.
It wasn't that long ago when the Las Vegas Strip went dark and people questioned whether Caesars Entertainment, MGM Resorts International, Wynn Resorts, and other Strip players would emerge from the crisis intact.
In the darkest days, the entire Las Vegas Strip was closed down and when it reopened, it was not business as usual. Caesars Entertainment (CZR) - Get Free Report and MGM reopened slowly with all sorts of government-mandated restrictions in place.
The first months of the Strip's comeback featured temperature checks, a lot of plexiglass, gaming tables with limited numbers of players, masks, and social distancing. It was an odd mix of celebration and restraint as people were happy to be in Las Vegas, but the Strip was oddly empty, some casinos remained closed, and gaming floors were sparsely filled.
When vaccines became available, the Las Vegas Strip benefitted quickly. Business and international travelers were slow to return, but leisure travelers began bringing crowds back to pre-pandemic levels.
The comeback, however, was very fragile. CES 2022 was supposed to be Las Vegas's return to normal, the first major convention since covid. In reality, surging cases of the covid omicron variant caused most major companies to pull out.
Even with vaccines and covid tests required, an event that was supposed to be close to normal, ended up with 25% of 2020's pre-covid attendance. That CES showed just how quickly public sentiment — not actual danger — can ruin an event in Las Vegas.
Now, with November's Formula 1 Race, CES in January, and the Super Bowl in February all slated for Las Vegas, a rising health crisis threatens all of those events.
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The Las Vegas Strip has a bed bug problem
While bed bugs may not be as dangerous as covid, Respiratory Syncytial Virus (RSV), Legionnaires’ disease, and some of the other infectious diseases that the Las Vegas Strip has faced over the past few years, they're still problematic. Bed bugs spread easily and a small infestation can become a large one quickly.
The sores caused by bed bugs are also a social media nightmare for the Las Vegas Strip. If even a few Las Vegas Strip visitors wake up covered in bed bug bites, that could become a viral nightmare for the entire city.
In late-August, reports came out the bed bugs had been at seven Las Vegas hotel, mostly on the Strip over the past two years. The impacted properties includes Caesars Planet Hollywood and Caesars Palace as well as MGM Resort International's (MGM) - Get Free Report MGM Grand, and others including Circus Circus, The Palazzo, Tropicana, and Sahara.
"Now, that number is nine with the addition of The Venetian and Park MGM. According to the health department report, a Venetian guest reported seeing the bloodsuckers on July 29 and was moved to another room. An inspection three days later confirmed their presence," Casino.org reported.
The Park MGM bed bug incident took place on Aug. 14.
Bed bugs remain a Las Vegas Strip problem
Only Tropicana, which is soon going to be demolished, and Sahara, responded to Casino.org about their bed bug issues. Caesars and MGM have not commented publicly or responded to requests from KLAS or Casino.org.
That makes sense because the resorts do not want news to spread about potential bed bug problems when the actual incidents have so far been minimal. The problem is that unreported bed bug issues can rapidly snowball.
The Environmental Protection Agency (EPA) shares some guidelines on bed bug bites on its website that hint at the depth of the problem facing Las Vegas Strip resorts.
"Regularly wash and heat-dry your bed sheets, blankets, bedspreads and any clothing that touches the floor. This reduces the number of bed bugs. Bed bugs and their eggs can hide in laundry containers/hampers. Remember to clean them when you do the laundry," the agency shared.
Normally, that would not be an issue in Las Vegas as rooms are cleaned daily. Since the covid pandemic, however, some people have opted out of daily cleaning and some resorts have encouraged that.
Not having daily room cleaning in just a few rooms could lead to quick spread.
"Bed bugs spread so easily and so quickly, that the University of Kentucky's entomology department notes that "it often seems that bed bugs arise from nowhere."
"Once bed bugs are introduced, they can crawl from room to room, or floor to floor via cracks and openings in walls, floors and ceilings," warned the University's researchers.
spread social distancing pandemic
Americans are having a tough time repaying pandemic-era loans received with inflated credit scores
Borrowers are realizing the responsibility of new debts too late.
With the economy of the United States at a standstill during the Covid-19 pandemic, the efforts to stimulate the economy brought many opportunities to people who may have not had them otherwise.
However, the extension of these opportunities to those who took advantage of the times has had its consequences.
A report by the Financial Times states that borrowers in the United States that took advantage of lending opportunities during the Covid-19 pandemic are falling behind on actually paying back their debt.
At a time when stimulus checks were handed out and loan repayments were frozen to help those affected by the economic shock of Covid-19, many consumers in the States saw that lenders became more willing to provide consumer credit.
According to a report by credit reporting agency TransUnion, the median consumer credit score jumped 20% to a peak of 676 in the first quarter of 2021, allowing many to finally have “good” credit scores. However, their data also showed that those who took out loans and credit from 2021 to early 2023 are having an hard time managing these debts.
“Consumer finance companies used this opportunity to juice up their growth at a time when funding was ample and consumers’ finances had gotten an artificial boost,” Chief economist of Moody’s Analytics Mark Zandi told FT. “Certainly a lot of lower-income households that got caught up in all of this will feel financial pain.”
Moody’s data shows that new credit cards accounts that were opened in the first quarter of 2023 have a 4% delinquency rate, while the same rate in September 2022 was 4.5%. According to the analysts, these levels were the highest for the same point of the year since 2008.
Additionally, a study by credit scoring company VantageScore found that credit cards issued in March 2022 had higher delinquency rates than cards issued at the same time during the prior four years.
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Credit cards were not the only debts that American consumers took on. As per S&P Global Ratings data, riskier car loans taken on during the height of the pandemic have more repayment problems than in previous years. In 2022, subprime borrowers were becoming delinquent on new cars loans at twice the rate of pre-pandemic levels.
S&P auto loan tracker Amy Martin told FT that lenders during the pandemic were “rather aggressive” in terms of signing new loans.
Bill Moreland of research group BankRegData has warned about these rising delinquencies in the past and had recently estimated that by late 2022, there were hundreds of billions of dollars in what he calls “excess lending based upon artificially inflated credit scores”.
The Government's Role
Because so many are failing to pay their bills, many are wary that the government assistance may have been a financial double-edged sword; as they were meant to alleviate financial stress during lockdown, while it led some of them to financial difficulty.
The $2.2 trillion Cares Act federal aid package passed in the early stages of the pandemic not only put cash in the American consumer’s pocket, but also protected borrowers from foreclosure, default and in some instances, lenders were barred from reporting late payments to credit bureaus.
Yeshiva University law professor Pam Foohey specializes in consumer bankruptcy and believes that the Cares Act was good policy, however she shifts the blame away from the consumers and borrowers.
“I fault lenders and the market structure for not having a longer-term perspective. That’s not something that the Cares Act should have solved and it still exists and still needs to be addressed.”
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Inflation: raising interest rates was never the right medicine – here’s why central bankers did it anyway
We need to start cutting rates, but there’s something that has to happen first.
Inflation remains too high in the UK. The annual rate of consumer price inflation to September was 6.7%, the same as a month earlier. This is well below the 11.1% peak reached in October 2022, but the failure of inflation to keep falling indicates it is proving far more stubborn than anticipated.
This may prompt the Bank of England’s Monetary Policy Committee (MPC) to raise the benchmark interest rate yet again when it meets in November, but in my view this would not be entirely justified.
In reality, the rate hikes that began two years ago have not been very helpful in tackling inflation, at least not directly. So what’s the problem and is there a better alternative?
Right policy, wrong inflation
Raising interest rates is the MPC’s main tool for trying to get inflation back to its target rate of 2%. The idea is that this makes it more expensive to borrow money, which should reduce consumer demand for goods and services.
The trouble is that the type of inflation recently witnessed in the UK seems less a problem of excessive demand than because costs have been rising for manufacturers and service providers. It’s known as “cost-push inflation” as opposed to “demand-pull inflation”.
Inflation rates (UK, US, eurozone)
Production costs have risen for several reasons. During the COVID-19 pandemic, central banks “created money” through quantitative easing to enable their governments to run large spending deficits to pay for furloughs and other interventions to help citizens through the crisis.
When countries started reopening, it meant people had money in their pockets to buy more goods and services. Yet with China still in lockdown, global supply chains could not keep pace with the resurgent demand so prices went up – most notably oil.
Oil price (Brent crude, US$)
Then came the Ukraine war, which further drove up prices of fundamental commodities, such as energy. This made inflation much worse than it would otherwise have been. You can see this reflected in consumer price inflation (CPI): it was just 0.6% in the year to June 2020, then rose to 2.5% in the year to June 2021, reflecting the supply constraints at the end of lockdown. By June 2022, four months after Russia’s invasion of Ukraine, CPI was 9.4%.
The policy problem
This begs the question, why has the Bank of England (BoE) been raising rates if it’s unlikely to be effective? One answer is that other central banks have been raising rates. If the BoE doesn’t mirror rate rises in the US and eurozone, investors in the UK may move their money to these other areas because they’ll get better returns on bonds. This would see the pound depreciating against the US dollar and euro, in turn increasing import prices and aggravating inflation.
Part of the problem has been that the US has arguably faced more of the sort of demand-led inflation against which interest rates are effective. For one thing, the US has been less at the mercy of rising energy prices because it is energy self-sufficient. It also didn’t lock down as uniformly as other major economies during the pandemic, so had a little more space to grow.
At the same time, the US has been more effective at bringing down inflation than the UK, which again suggests it was fighting demand-driven price rises. In other words, the UK and other countries may to some extent have been forced to follow suit with raising interest rates to protect their currencies, not to fight inflation.
How harmful have the rate rises been in the UK? They have not brought about a recession yet, but growth remains very weak. Lots of people are struggling with the cost of living, as well as rent or mortgage costs. Several million people are due to be hit by much higher mortgage rates as their fixed-rate deals end between now and the end of 2024.
UK GDP growth (%)
If hiking interest rates is not really helping to curb inflation, it makes sense to start moving in the opposite direction before the economic situation gets any worse. To avoid any damage to the pound, the answer is for the leading central banks to coordinate their policies so that they cut rates in lockstep.
Unless and until this happens, there would seem to be no quick fix available. One piece of good news is that the energy price cap for typical domestic consumption was reduced from October 1 from £1,976 to £1,834 a year. That 7% reduction should lead to consumer price inflation coming down significantly towards the end of 2023.
More generally, the Bank of England may simply have to hope that world events move inflation in the desired direction. A key question is going to be whether the wars in Ukraine and Israel/Gaza result in further cost pressures.
Unfortunately there is a precedent for a Middle East conflict leading to a global economic crisis: following the joint assault on Israel by Syria and Egypt in 1973, Israel’s retaliation prompted petroleum cartel OPEC to impose an oil embargo. This led to an almost fourfold increase in the price of crude oil.
Since oil was fundamental to the costs of production, inflation in the UK rose to over 16% in 1974. There followed high unemployment, resulting in an unwelcome combination that economists referred to as stagflation.
These days, global production is in fact less reliant on oil as renewables have become a growing part of the energy mix. Nonetheless, an oil price hike would still drive inflation higher and weaken economic growth. So if the Middle East crisis does spiral, we may be stuck with stubborn, untreatable inflation for even longer.
Robert Gausden does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.recession unemployment economic growth reopening bonds monetary policy mortgage rates currencies pound us dollar euro governor lockdown pandemic covid-19 recession gdp interest rates commodities oil uk russia ukraine china
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