A new wave of optimism is splashing onto the Street. Investment firm Goldman Sachs just gave its three-month stock forecast a boost, lifting it from Neutral to Overweight, with it also projecting “high single-digital returns” for global stocks over the next year.
What’s behind this updated approach? Goldman Sachs strategist Christian Mueller-Glissmann cites the impressive rebound in global earnings growth and reduced equity costs as the drivers of the estimate revision. On top of this, a “broader procyclical shift” in stocks and other assets could take place during the remainder of this year.
“We have shifted more cyclical on sectors and themes tactically but still prefer growth vs. value on a strategic horizon... In the near-term, elevated uncertainty on U.S. elections and a better global growth outlook might benefit non-U.S. equities more, but in the medium term a large weight in structural growth stocks is likely to support the S&P 500,” Mueller-Glissmann noted.
As for the “most important catalyst” that could spur growth optimism in the next year, the strategist points to additional clarity on when and how a COVID-19 vaccine will be available.
Turning Mueller-Glissmann's outlook into concrete recommendations, Goldman Sachs’ analysts are pounding the table on three stocks that look especially compelling. According to these analysts, each name is poised to surge in the 12 months ahead.
First up we have Raytheon Technologies, which is an aerospace and defense company that provides advanced systems and services for commercial, military and government customers. While shares have stumbled in 2020, Goldman Sachs thinks the weakness presents a buying opportunity.
Representing the firm, analyst Noah Poponak points out that RTX is “too high quality and well positioned of a company to trade at an 11% free cash flow yield on the fully aerospace-recovered and fully synergized 2023E free cash.”
The analyst’s bullish outlook is largely driven by the company’s aerospace aftermarket (the secondary market that deals with the installation of equipment, spare parts, accessories and components after the sale of the aircraft by the original equipment manufacturer) business, which Poponak argues is “the best sub-market within Aerospace over the long-term.” This segment makes up roughly 45% of RTX’s aerospace revenue.
Even though COVID-19 flight disruptions have weighed on this part of the business, Poponak points out total aircraft in service is down only 25% year-over-year, and flights have dipped less than 50%. He added, “China domestic traffic is now up year on year, and while international remains depressed, we believe the recovery in global air travel could be quicker from here than broad expectations for a recovery by 2023-2024.”
Poponak highlights that in previous downturns, the aftermarket had to confront headwinds that arose from the increased use of parting out, inventory pooling and delayed aftermarket spending. “Even then, aftermarket grew at or faster than ASMs, and we believe there was pent-up demand heading into this downturn that support aftermarket tracking the recovery in global air travel. Long-term, we expect air traffic to grow 2X global GDP, as it has historically,” the analyst commented.
Adding to the good news, the Geared Turbo Fan, which is a type of turbofan aircraft engine, product cycle could generate substantial revenue and EBIT growth at Pratt & Whitney, in Poponak’s opinion.
“Given the high OE exposure to the A320neo, which has the strongest backlog of any aircraft in the market, we see Pratt OE revenue holding up better and recovering faster than peers. New GTF deliveries will drive expansion in the installed base for Pratt, which was declining for most of the 2000s. Despite the end of V2500 OE deliveries, that program is just moving into the sweet-spot for shop visits on the aftermarket side,” Poponak opined.
What’s more, Poponak sees merger synergies as capable of fueling margin expansion and cash generation, with the historical synergy capture in the space implying that upside to guidance isn’t out of the question.
In line with his optimistic approach, Poponak stays with the bulls. To this end, he keeps a Buy rating and $86 price target on the stock. Investors could be pocketing a gain of 49%, should this target be met in the twelve months ahead. (To watch Poponak’s track record, click here)
In general, other analysts echo Poponak’s sentiment. 7 Buys and 2 Holds add up to a Strong Buy consensus rating. With an average price target of $78.63, the upside potential comes in at 36.5%. (See RTX stock analysis on TipRanks)
Moving on to another player in the aerospace space, Boeing has also struggled on account of the COVID-19 pandemic, with it failing to match the pace of the broader market. That being said, Goldman Sachs has high hopes for this name going forward.
Firm analyst Noah Poponak, who also covers RTX, points out that BA has already trimmed production rate plans by half, compared to the peak plan from before the COVID crisis and MAX grounding. A slower-than-anticipated air travel rebound could result in more reductions, but the analyst argues these would be much smaller than the reductions that have already been witnessed. He added, “Historically, the best buying opportunities in BA shares are right after it has capitulated to production rate cuts.”
According to Poponak, compared to previous economic declines, the peak to trough in the current downturn is larger and faster, although this is partly related to the grounding of the 737 MAX in 2019. “We believe this will result in a less severe dislocation of supply and demand balance, and see deliveries recovering to 2018 levels by 2024 as global air travel recovers and airlines replace accelerated retirements,” he explained.
As for how the company can fulfill its new production rate plan “given the mix of its backlog is so much more weighted to growth than replacement,” Poponak believes “the answer is that airlines during this downturn are revising that mix.” Since the pandemic’s onset, airlines have revealed higher aircraft retirement plans, and braced for less growth. “That means for a given revision in an airline’s order book, there is also a substantial mix shift toward replacement from growth within the new delivery numbers. Therefore, the backlog will not necessarily lose all of its growth orders,” the analyst stated.
Additionally, following an uptick in aircraft order cancellations in March and April, the pace has slowed. “Even assuming another 200-plus unit cancellations this year, we estimate the 737 MAX would have nearly 6X years of production by the middle of the decade at our revised production rate estimates,” Poponak mentioned.
When it comes to free cash flow, the analyst is also optimistic, with Poponak forecasting that BA will see positive free cash flow in 2021. “We think the market is underestimating the mid-cycle achievable aircraft unit cash margins across the major programs, extrapolating temporarily negative items into the future, and underestimating the degree of inventory unwind likely to occur in 2021,” he said.
If that wasn’t enough, the MAX recertification could be a major possible catalyst. The company is working towards recertification and return to service, with Poponak expecting both to come before year-end.
Taking all of the above into consideration, Poponak maintains a Buy rating and $225 price target. This target conveys his confidence in BA’s ability to climb 35% higher in the next year.
Turning to the rest of the analyst community, opinions are mixed. With 8 Buys, 8 Holds and 1 Sell assigned in the last three months, the word on the Street is that BA is a Moderate Buy. At $192.40, the average price target implies 16% upside potential. (See Boeing stock analysis on TipRanks)
Combining the discovery of true targets for cancer immunotherapies (therapies that utilize the power of the immune system) with the development of the right T cell receptors, Immatics hopes to ultimately enable a robust and specific T cell response against these targets. Based on its cutting-edge approach, Goldman Sachs counts itself as a fan.
Writing for the firm, analyst Graig Suvannavejh notes that unlike CAR-T approaches, a T cell receptor (TCR)-based approach can go after targets inside the cell, and fight the 90% of cancers which are solid tumor in nature. The company is advancing two technologies: ACTengine, designed for personalized TCR-based cell therapies, and TCER, which targets TCR-based bispecific antibodies.
ACTengine is the more advanced technology, with its four assets IMA201, a genetically engineered T cell product candidate that targets melanoma-associated antigen 4 or 8, IMA202, which targets melanoma-associated antigen 1, IMA203, which targets preferentially expressed antigen in melanoma (PRAME) and IMA204 that targets COL6A3 (found in a tumor’s stroma and is highly prevalent in the tumor microenvironment/TME in a broad range of cancers) expected to enter the clinic soon.
Using the TCER platform, IMTX is developing IMA401 and IMA402, or “off-the-shelf” biologics consisting of a portion of the TCR which directly recognizes cancer cells and a T cell recruiter domain which recruits and activates the patient’s T cells.
Speaking to the market opportunity, Suvannavejh mentioned, “Cancer immunotherapies have made great strides over the past decade, and in particular, advances seen with CAR-T have paved the way for cell therapy-based approaches... CAR-T, however, has to date only shown limited effect in treating cancers that are solid tumor in nature. With more than 90% of all cancers being solid tumors — with lung, breast, colorectal and prostate cancers accounting for c.60% of the total — this is the opportunity for IMTX.” To this end, he believes cumulative 2035 sales could land at $15.5 billion for the ACTengine-based assets.
Reflecting another positive, since 2017, IMTX has inked at least one significant partnership per year with top global biopharma companies. According to Suvannavejh, each provided non-dilutive funding opportunities.
The analyst added, “...the ARYA Sciences Acquisition Corporation, a special purpose acquisition company (SPAC), merger that enabled IMTX to become a publicly traded entity brought in a deep roster of well-known, experienced healthcare-dedicated institutional investors. Taken together, we find these to be validating of IMTX’s longer-term prospects.”
Looking ahead, the initial clinical data readouts for IMA201, IMA202 and IMA203, which are slated for Q1 2021, and investigational new drug (IND) application submissions for IMA204 and IMA401 in 2021 and YE2021, respectively, reflect key potential catalysts, in Suvannavejh’s opinion.
Everything that IMTX has going for it convinced Suvannavejh to reiterate his Buy rating. Along with the call, he attached a $17 price target, suggesting 73% upside potential. (To watch Suvannavejh’s track record, click here)
Are other analysts in agreement? They are. Only Buy ratings, 4, in fact, have been issued in the last three months. Therefore, the message is clear: IMTX is a Strong Buy. Given the $19 average price target, shares could soar 93% in the next year. (See Immatics 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.
It was Jan. 11, 2024 when software giant Microsoft (MSFT) briefly passed Apple (AAPL) as the most valuable company in the world.
Microsoft's stock closed 0.5% higher, giving it a market valuation of $2.859 trillion.
It rose as much as 2% during the session and the company was briefly worth $2.903 trillion. Apple closed 0.3% lower, giving the company a market capitalization of $2.886 trillion.
"It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution," D.A. Davidson analyst Gil Luria said at the time, according to Reuters.
The two tech titans have jostled for top spot over the years and Microsoft was ahead at last check, with a market cap of $3.085 trillion, compared with Apple's value of $2.684 trillion.
Analysts noted that Apple had been dealing with weakening demand, including for the iPhone, the company’s main source of revenue.
Demand in China, a major market, has slumped as the country's economy makes a slow recovery from the pandemic and competition from Huawei.
Sales in China of Apple's iPhone fell by 24% in the first six weeks of 2024 compared with a year earlier, according to research firm Counterpoint, as the company contended with stiff competition from a resurgent Huawei "while getting squeezed in the middle on aggressive pricing from the likes of OPPO, vivo and Xiaomi," said senior Analyst Mengmeng Zhang.
“Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now," he said.
A man scrolling through Netflix on an Apple iPad Pro. Photo by Phil Barker/Future Publishing via Getty Images.
Counterpoint said that the first six weeks of 2023 saw abnormally high numbers with significant unit sales being deferred from December 2022 due to production issues.
Apple is planning to open its eighth store in Shanghai – and its 47th across China – on March 21.
The company also plans to expand its research centre in Shanghai to support all of its product lines and open a new lab in southern tech hub Shenzhen later this year, according to the South China Morning Post.
Meanwhile, over in Europe, Apple announced changes to comply with the European Union's Digital Markets Act (DMA), which went into effect last week, Reuters reported on March 12.
Beginning this spring, software developers operating in Europe will be able to distribute apps to EU customers directly from their own websites instead of through the App Store.
"To reflect the DMA’s changes, users in the EU can install apps from alternative app marketplaces in iOS 17.4 and later," Apple said on its website, referring to the software platform that runs iPhones and iPads.
"Users will be able to download an alternative marketplace app from the marketplace developer’s website," the company said.
Apple has also said it will appeal a $2 billion EU antitrust fine for thwarting competition from Spotify (SPOT) and other music streaming rivals via restrictions on the App Store.
The company's shares have suffered amid all this upheaval, but some analysts still see good things in Apple's future.
Bank of America Securities confirmed its positive stance on Apple, maintaining a buy rating with a steady price target of $225, according to Investing.com.
The firm's analysis highlighted Apple's pricing strategy evolution since the introduction of the first iPhone in 2007, with initial prices set at $499 for the 4GB model and $599 for the 8GB model.
BofA said that Apple has consistently launched new iPhone models, including the Pro/Pro Max versions, to target the premium market.
Analyst says Apple selloff 'overdone'
Concurrently, prices for previous models are typically reduced by about $100 with each new release.
This strategy, coupled with installment plans from Apple and carriers, has contributed to the iPhone's installed base reaching a record 1.2 billion in 2023, the firm said.
Apple has effectively shifted its sales mix toward higher-value units despite experiencing slower unit sales, BofA said.
This trend is expected to persist and could help mitigate potential unit sales weaknesses, particularly in China.
BofA also noted Apple's dominance in the high-end market, maintaining a market share of over 90% in the $1,000 and above price band for the past three years.
The firm also cited the anticipation of a multi-year iPhone cycle propelled by next-generation AI technology, robust services growth, and the potential for margin expansion.
On Monday, Evercore ISI analysts said they believed that the sell-off in the iPhone maker’s shares may be “overdone.”
The firm said that investors' growing preference for AI-focused stocks like Nvidia (NVDA) has led to a reallocation of funds away from Apple.
In addition, Evercore said concerns over weakening demand in China, where Apple may be losing market share in the smartphone segment, have affected investor sentiment.
And then ongoing regulatory issues continue to have an impact on investor confidence in the world's second-biggest company.
“We think the sell-off is rather overdone, while we suspect there is strong valuation support at current levels to down 10%, there are three distinct drivers that could unlock upside on the stock from here – a) Cap allocation, b) AI inferencing, and c) Risk-off/defensive shift," the firm said in a research note.
Major typhoid fever surveillance study in sub-Saharan Africa indicates need for the introduction of typhoid conjugate vaccines in endemic countries
There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high…
There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.
Credit: IVI
There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.
The findings from this 4-year study, the Severe Typhoid in Africa (SETA) program, offers new typhoid fever burden estimates from six countries: Burkina Faso, Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Madagascar, and Nigeria, with four countries recording more than 100 cases for every 100,000 person-years of observation, which is considered a high burden. The highest incidence of typhoid was found in DRC with 315 cases per 100,000 people while children between 2-14 years of age were shown to be at highest risk across all 25 study sites.
There are an estimated 12.5 to 16.3 million cases of typhoid every year with 140,000 deaths. However, with generic symptoms such as fever, fatigue, and abdominal pain, and the need for blood culture sampling to make a definitive diagnosis, it is difficult for governments to capture the true burden of typhoid in their countries.
“Our goal through SETA was to address these gaps in typhoid disease burden data,” said lead author Dr. Florian Marks, Deputy Director General of the International Vaccine Institute (IVI). “Our estimates indicate that introduction of TCV in endemic settings would go to lengths in protecting communities, especially school-aged children, against this potentially deadly—but preventable—disease.”
In addition to disease incidence, this study also showed that the emergence of antimicrobial resistance (AMR) in Salmonella Typhi, the bacteria that causes typhoid fever, has led to more reliance beyond the traditional first line of antibiotic treatment. If left untreated, severe cases of the disease can lead to intestinal perforation and even death. This suggests that prevention through vaccination may play a critical role in not only protecting against typhoid fever but reducing the spread of drug-resistant strains of the bacteria.
There are two TCVs prequalified by the World Health Organization (WHO) and available through Gavi, the Vaccine Alliance. In February 2024, IVI and SK bioscience announced that a third TCV, SKYTyphoid™, also achieved WHO PQ, paving the way for public procurement and increasing the global supply.
Alongside the SETA disease burden study, IVI has been working with colleagues in three African countries to show the real-world impact of TCV vaccination. These studies include a cluster-randomized trial in Agogo, Ghana and two effectiveness studies following mass vaccination in Kisantu, DRC and Imerintsiatosika, Madagascar.
Dr. Birkneh Tilahun Tadesse, Associate Director General at IVI and Head of the Real-World Evidence Department, explains, “Through these vaccine effectiveness studies, we aim to show the full public health value of TCV in settings that are directly impacted by a high burden of typhoid fever.” He adds, “Our final objective of course is to eliminate typhoid or to at least reduce the burden to low incidence levels, and that’s what we are attempting in Fiji with an island-wide vaccination campaign.”
As more countries in typhoid endemic countries, namely in sub-Saharan Africa and South Asia, consider TCV in national immunization programs, these data will help inform evidence-based policy decisions around typhoid prevention and control.
###
About the International Vaccine Institute (IVI)
The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.
IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO) and developed a new-generation typhoid conjugate vaccine that is recently pre-qualified by WHO.
IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, a Country Office in Austria, and Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit https://www.ivi.int.
Incidence of typhoid fever in Burkina Faso, Democratic Republic of the Congo, Ethiopia, Ghana, Madagascar, and Nigeria (the Severe Typhoid in Africa programme): a population-based study
We’ve added 60% to national debt since 2018. Germany - a country with major economic woes - added ‘just’ 32%.
Maybe it will never matter. Maybe MMT is real. Maybe we just cancel or inflate it out. Maybe career real estate borrowers or career politicians aren’t the answer.
I have no idea. Only time will tell. But it’s going to be fascinating to watch it play out.
He is right: it will be fascinating, and the latest budget deficit data simply confirmed that the day of reckoning will come very soon, certainly sooner than the two years that One River's Eric Peters predicted this weekend for the coming "US debt sustainability crisis."
According to the US Treasury, in February, the US collected $271 billion in various tax receipts, and spent $567 billion, more than double what it collected.
The two charts below show the divergence in US tax receipts which have flatlined (on a trailing 6M basis) since the covid pandemic in 2020 (with occasional stimmy-driven surges)...
... and spending which is about 50% higher compared to where it was in 2020.
The end result is that in February, the budget deficit rose to $296.3 billion, up 12.9% from a year prior, and the second highest February deficit on record.
And the punchline: on a cumulative basis, the budget deficit in fiscal 2024 which began on October 1, 2023 is now $828 billion, the second largest cumulative deficit through February on record, surpassed only by the peak covid year of 2021.
But wait there's more: because in a world where the US is spending more than twice what it is collecting, the endgame is clear: debt collapse, and while it won't be tomorrow, or the week after, it is coming... and it's also why the US is now selling $1 trillion in debt every 100 days just to keep operating (and absorbing all those millions of illegal immigrants who will keep voting democrat to preserve the socialist system of the US, so beloved by the Soros clan).
... having already surpassed total US defense spending and soon to surpass total health spending and, finally all social security spending, the largest spending category of all, which means that US debt will now rise exponentially higher until the inevitable moment when the US dollar loses its reserve status and it all comes crashing down.
We conclude with another observation by CNBC's Brian Sullivan, who quotes an email by a DC strategist...
.. which lays out the proposed Biden budget as follows:
The budget deficit will growth another $16 TRILLION over next 10 years. Thats *with* the proposed massive tax hikes.
Without them the deficit will grow $19 trillion.
That's why you will hear the "deficit is being reduced by $3 trillion" over the decade.
No family budget or business could exist with this kind of math.
Of course, in the long run, neither can the US... and since neither party will ever cut the spending which everyone by now is so addicted to, the best anyone can do is start planning for the endgame.
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