The S&P 500 has been reaching record highs again. The strong investor sentiment has been supported by the falling rate of inflation, and expectations that the Federal Reserve will have room to cut back on interest rates this year.
This has colored Oppenheimer’s chief investment strategist John Stoltzfus’ current take on the economy. “In our view ‘so far so good’ is what the economic data stateside is saying,” the strategist recently said. “While the economy has indeed shown some slowing in the face of the rate hike cycle it nonetheless has remained resilient. In our view the Fed has been remarkably sensitive in how it has applied its mandate in battling inflation. The central bank has been able to raise rates since March 2022 without pushing the economy into recession (so far).”
Following this upbeat reflection on recent events, Oppenheimer’s stock analysts are turning out Buy ratings for a wide range of stocks. They are advising to take action at what appears to be the onset of another bullish phase, telling investors now is the time to pull the trigger on certain names. We’ve used the TipRanks database to find out what the rest of the Street has to say about three of their recent picks.
Bread Financial Holdings (BFH)
We’ll start in the financial world, with Bread Financial Holdings, a company that works in the online finance niche, providing a set of simple, personalized options for lending, savings, and payments. The company is known for its credit card rewards programs, and offers customers an Amex card with a guaranteed 2% cash back reward and $0 in annual fees. In addition, Bread customers can set up personal savings accounts, with a minimum opening balance of just $100 and a high yield of 5.15% APR, more than enough to ensure a real rate of return. Bread also offers its customers the online payment application, Bread Pay, a non-credit card app designed to enable quick and convenient payment options on current purchases.
The Q4 earnings season is here, and Bread recently reported its latest results. The company showed a revenue total of $1.02 billion for the quarter, down 1% year-over-year – but also $33.3 million better than had been anticipated. Bread has recently been consistently beating the revenue forecasts in its quarterly financial results. The company’s EPS, at 90 cents, was in-line with the forecast.
While it did not beat expectations, Bread’s earnings did fully cover the company’s regular share dividend. The current payment, at 21 cents per share, has been steady since 2020 with the next distribution scheduled for March 15. The annualized payment of 84 cents per share gives a moderate yield of 2.36%.
This stock caught the eye of Oppenheimer’s Dominick Gabriele, who believes that the shares are undervalued. Gabriele writes of BFH, “We usually stay away from transition stories during tough economic times, but BFH’s valuation and near-rightsized capital metrics are very enticing. BFH has brought its tangible common equity/tangible asset ratio to 9.63% in 4Q23 while paying down significant debt. Although late fee impacts are a big hurdle, this management team has proven to us they’re deliberate and focused for LT returns.”
Setting out a path forward for the stock, the analyst adds, “Channel diversification, model simplification, and a more sound balance sheet should give investors comfort. BFH is working toward continued core efficiency gains annually. Credit remains a headwind, but the company is tightening underwriting.”
At the bottom line, Gabriele gives BFH shares an Outperform (Buy) rating, with a $52 price target that predicts a one-year upside potential of 46.5%. (To watch Gabriele’s track record click here)
While Oppenheimer is willing to go bullish here, the Street generally is cautious. The shares have 12 recent analyst reviews, breaking down to 1 Buy, 7 Holds, and 4 Sells – for a Hold consensus rating. The stock is selling for $35.47 and its $35.09 average price target suggests the stock will stay rangebound for the time being. (See BFH stock forecast)
Coinbase Global (COIN)
Next on today’s list is Coinbase, a leader in the world of online digital currencies. Coinbase operates a major cryptocurrency exchange, and makes its exchange platform and crypto wallet available on both desktop and mobile devices. Users can buy and trade in most major cryptocurrencies, including Bitcoin, Ethereum, and USDC.
Crypto trading has become big business. Bitcoin, for example, peaked above $64,000 in November of 2021, and while it fell to less than one-third that value within one year, the flagship crypto has rallied and is back up to the $42K level. Coinbase has profited mightily from these gains and the associated increased trading activity, and the stock, despite a pullback from its December 2023 peak, still shows a 12-month gain of 123%. The company currently boasts a market cap of nearly $30 billion.
A few numbers will suffice to show the scale of Coinbase’s activity. The company serves users in more than 100 countries, and hosts more than $114 billion worth of safeguarded assets on its platform.
Coinbase’s trading activities caught the attention of the Federal Securities and Exchange Commission, which in June of last year filed suit against the company. The SEC claims that Coinbase should fall under its aegis, and is currently operating as an unregistered securities broker. Coinbase has moved to have the suit dismissed, and the judge in the case will likely come to a decision on the dismissal motion in the next three months.
In Q3, the last reported quarter, Coinbase handled a total trading volume of $76 billion and reported a total top line of $674 million, a figure that was up 14.2% year-over-year and some $20 million ahead of the forecast. The company’s net earnings, by GAAP measures, came to a 1-cent loss per share – but this, too, was better than had been expected, beating the estimates by 52 cents per share.
Turning to the Oppenheimer view, we find analyst Owen Lau taking an upbeat view on the stock, listing several reasons why COIN shares deserve an upgrade: “Our upgrade is based on our thesis that 1) either COIN will prevail in SEC lawsuit or the court will dismiss it; 2) Spot Bitcoin ETF is a net positive; 3) COIN’s fundamentals are in upward trajectory; 4) prospects for positive GAAP EPS in 4Q23 or early 2024; and 5) multiple near- and long term catalysts… The stock was under extreme scrutiny during crypto winter. While many peers went under, COIN is still standing and fighting for its businesses and the industry. We believe the company is stronger than many people realize, and the management team is tougher than most investors think.”
Lau’s upgrade takes his stance from Neutral to Outperform (Buy), and his $160 price target implies a one-year upside potential of 28% for the shares. (To watch Lau’s track record, click here)
All in, Wall Street’s take is less optimistic. The consensus view on Coinbase stock is a Hold, based on 20 recent reviews that include 8 to Buy, 4 to Hold, and 8 to Sell. The shares are trading for $125.20 and their $128.58 average price target suggests the shares will remain at roughly the same level a year from now. (See COIN stock forecast)
Entrada Therapeutics (TRDA)
Last on our Oppenheimer-backed list is an early-clinical-stage biopharmaceutical company, Entrada Therapeutics. This firm is taking an exciting and interesting approach to the treatment of rare genetic diseases that have high unmet medical needs – that is, that lack effective treatments here and now. Entrada is working with a new platform technology, the proprietary endosomal escape vehicle, or EEV, which is designed to be both versatile and modular. The platform allows the development of a new class of EEV medicines, capable of reaching targets that were previously considered ‘undruggable.’
Entrada’s EEV platform enables something new, the efficient delivery of therapeutic agents through intracellular pathways, in a variety of organs and tissues. This ability to reach intracellular targets is important, as some 75% of disease-causing agents are located inside cells – but only 2% or fewer of current therapeutics can reach their intended targets. The company’s preclinical studies have shown that the EEV-enabled drugs can reach their intended intracellular targets as much as 50% of the time. This opens up new opportunities for treatments, across a wide range of disease conditions.
Entrada is working with its proprietary technology to build new therapeutics for several diseases, but the most advanced research is targeting Duchenne muscular dystrophy. The company’s leading pipeline track, featuring the drug candidate ENTR-601-44, aims to address the underlying genetic cause of the disease. The drug candidate is an EEV-oligonucleotide designed to enable muscle cells to produce functional dystrophin.
The company currently has ENTR-601-44 in a Phase 1 clinical trial in the UK, and has completed dosing cohorts 1 and 2 in the trial. Data from this part of the trial is expected during the second half of this year. On a negative note, Entrada reported back in November that the Federal Food and Drug Administration refused to lift a clinical hold on the Phase 1 trial in the US.
Despite the FDA hold, Oppenheimer analyst Hartaj Singh believes that Entrada – and especially its leading drug candidate – deserves a closer look from investors. He is upbeat on the prospect of clinical data this year, and writes of the company, “We see strong preclinical rationale for the company’s proprietary and modality-agnostic intracellular delivery platform, the Endosomal Escape Vehicle (EEV). EEV therapeutics have a high intracellular uptake in tissues with a potential to improve therapeutic index. Entrada is initially exploring neuromuscular diseases such as DMD and DM1 (in collaboration with Vertex). Preclinical data from mice and NHPs gives us confidence in the lead program—ENTR-601-44’s target profile of double-digit dystrophin improvement from baseline and a durable dosing interval of at or beyond 6 weeks… We await first clinical data from Phase 1 healthy volunteers trial of ENTR-601-44 in 2H24.”
These comments support the 5-star analyst’s Outperform (Buy) rating on the stock, and his $22 price target points toward a 48% gain on the one-year horizon. (To watch Singh’s track record, click here)
This stock has earned a Strong Buy consensus rating from the Street’s analysts – the four recent reviews on TRDA are all positive, making that consensus unanimous. The shares are currently priced at $14.83, and their average target price of $21 suggests a ~41.5% potential upside for the coming year. (See Entrada’s stock forecast)
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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.
