And just like that, Election Day has come and gone. After Americans took to the polls, Wall Street is anxiously waiting to see if a clear winner will be named.
According to Wall Street pros, a declared winner, regardless of who it is, would be beneficial to the markets. That said, some argue volatility in the days after the election is not out of the question. To this end, the pros recommend taking advantage of any quick dips to pick up compelling names.
Bearing this in mind, we turned to investment firm Goldman Sachs for some inspiration. Looking at two stocks in particular, both have been deemed must-watch names by the firm’s analysts. Running the tickers through TipRanks’ database, we found out that each boasts a “Strong Buy” analyst consensus.
Moderna (MRNA)
Biotech Moderna has landed under the spotlight since the onset of the pandemic, with it taking a leading position in the race to develop a COVID-19 vaccine. Ahead of the first Phase 3 interim data readout for its experimental vaccine candidate, Goldman Sachs is pounding the table.
According to management, the Phase 3 COVE study evaluating its COVID-19 vaccine candidate, mRNA-1273, is on track for the first interim analysis this month, and the second interim analysis at 106 events will most likely come in December.
Looking more closely at the study, it is fully enrolled, as of October 22, and 25,654 participants have received the second vaccination. The company has highlighted the study’s diversity, with 37% of subjects coming from diverse communities and 25% of participants over 65 years old. Additionally, 17% of participants have comorbidities and over 8,000 participants have chronic conditions like diabetes or severe obesity.
As second dose two-month median follow-up (15,000 participants) safety data is expected in the back half of November, Goldman Sachs’ Salveen Richter argues an emergency use authorization (EUA) could come by YE20. “Importantly, we highlight management’s confidence in achieving these timelines, which is supported by trends in infection rates and internal models,” she explained.
On top of this, MRNA already has several supply contracts in place for the experimental vaccine, with it recently revealing that the Ministry of Health, Labour and Welfare of Japan and Takeda (TAK) has agreed to purchase and distribute 50 million doses. It’s also working to ink deals with the European Union, COVAX, as well as with many other countries.
All in all, MRNA received $1.1 billion of customer deposits for the supply of mRNA-1273 in Q3 2020. In the U.S., the agreement will begin after the candidate is granted an EUA.
What’s more, based on the “ease of administration and storage,” MRNA says “vaccine can be deployed in multiple settings including hospitals, physician’s offices, nursing homes and immunization centers.” Beyond mRNA-1273, the rest of its pipeline is also progressing well, in the five-star analyst’s opinion.
Taking all of this into consideration, Richter maintains a Buy rating and bumps up the price target from $107 to $108. This target conveys her confidence in MRNA’s ability to climb 52% higher in the next year. (To watch Richter’s track record, click here)
In general, other analysts are on the same page. 10 Buys, 1 Hold and 1 Sell add up to a Strong Buy consensus rating. With an average price target of $96.91, the upside potential comes in at ~37%. (See Moderna stock analysis on TipRanks)
Herc Holdings (HRI)
As one of the largest equipment rental companies in North America, Herc Holdings meets the needs of customers through its approximately 270 locations. With its recovery gaining significant traction, Goldman Sachs thinks that now is the time to get in on the action.
Goldman Sachs analyst Jerry Revich believes its Q3 earnings release demonstrates “an accelerating utilization recovery, steady pricing, and strong cost control.” According to the five-star analyst, the key takeaway was that utilization beat his estimate by 200 basis points. In addition, HRI guided for fleet on rent growth of approximately 1.4% sequentially in Q4, versus normal seasonality of -2%, with Revich also calling capex “disciplined.”
During the quarter, fleet on rent increased 21%-plus sequentially compared to 12%-plus on average for the past three years, driven by a recovery in the non-residential commercial markets, particularly within the emergency response space.
As a result, the analyst estimates that Q4 utilization will only be down 200 basis points year-over-year, compared to the 800-basis point drop in Q2. As capex and fleet size guidance remains unchanged, Revich thinks supply is “tight.”
Although Q3 EBITDA of $197 million beat Revich and the Street’s estimates, implied Q4 EBITDA guidance of $171 million landed 8% below pre-result consensus EBITDA, with shares falling in response. However, Revich points out that with “fleet on rent set to rise sequentially and pricing stable, both factors that are well ahead of normal seasonality,” he argues “the guidance of a sequential decline in EBITDA reflects management’s conservatism in the second quarter of a recovery following a deep trough.”
To this end, the analyst’s Q4 EBITDA estimate is 16% above the high-end of guidance. Revich added, “We believe visibility on a cyclical recovery significantly improved today despite the conservative guidance.”
In line with his optimistic approach, Revich sides with the bulls, reiterating a Buy rating. He also puts a $62 price target on the stock, bringing the upside potential to 41%. (To watch Revich’s track record, click here)
Are other analysts in agreement? They are. Only Buy ratings, 4 to be exact, have been issued in the last three months. Therefore, the message is clear: HRI is a Strong Buy. Given the $55.25 average price target, shares could surge 25% in the next year. (See HRI stock analysis on TipRanks)
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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.
