Morgan Stanley Bets on These 3 Stocks; Sees Over 40% Upside
Did the stock market’s epic rally just need a little breather? The last few weeks have seen stocks experience their first meaningful correction since the bull market kicked off in March. Now, the question swirling around the Street is, will the rally pick back up again, or is more downside on the way?According to Morgan Stanley’s chief U.S. equity strategist Mike Wilson, uncertainty regarding the presidential election and stalemate on the next stimulus package could lead to declines in September and October. “On the correction, there’s still downside as markets digest the risk of congressional gridlock on the next fiscal deal. While we think something will ultimately get done, it will likely take another few weeks to get it over the goal line,” he noted.However, Wilson argues the recent volatility in no way signals the end of the current bull market. “We think this correction is just that, a correction in a new bull market. It’s normal for markets to pullback after such an incredible run like we’ve experienced since March. Furthermore, when a new bull market coincides with a new economic cycle, the bull market usually runs for years, not months,” the strategist explained.Taking Wilson’s outlook to heart, our focus shifted to three stocks getting a thumbs up from Morgan Stanley. As the firm’s analysts see over 50% upside potential in store for each, we used TipRanks’ database to get the full scoop.Akero Therapeutics (AKRO)With its innovative medicines designed to restore metabolic balance and halt the progression of NASH, a severe form of nonalcoholic fatty liver disease, Akero Therapeutics wants to address the unmet medical needs of patients from all over the world. Based on the strength of its lead candidate, Morgan Stanley is pounding the table.Representing the firm, 5-star analyst Matthew Harrison tells clients that AKRO’s treatment for NASH, efruxifermin (EFX), has a “best-in-class profile.” EFX is the company’s lead asset and was designed to mimic the biological activity of fibroblast growth factor 21 (FGF21), which regulates multiple metabolic pathways and cellular processes, to reduce liver fat and inflammation, reverse fibrosis, increase insulin sensitivity and improve lipoproteins.According to Harrison, NASH is a complex disease, with patients usually having multiple co-morbidities like obesity, type-2 diabetes, increased triglycerides, increased LDL cholesterol and low HDL cholesterol. “A promising therapeutic solution would not only treat the multiple components of NASH but would also have an acceptable side effect profile given the potential co-morbidities,” the analyst explained.That’s where AKRO’s therapy comes in. “In June, Akero presented best-in-class data from its Phase 2a study. This data indicates that EFX improved the two liver histological endpoints recommended by the FDA along with resulting in weight loss, improving cardiovascular health (increasing good HDL cholesterol, decreasing triglycerides, not raising bad LDL cholesterol), and improving factors related to controlling blood glucose levels. This benefit/risk profile beats the competition,” Harrison stated.Looking at the indication as a whole, Harrison views NASH as a very large opportunity given that roughly 20 million people in the U.S. suffer from the condition.The analyst, however, acknowledges there are commercial hurdles. One of these is the fact that “NASH is currently undiagnosed in all but a very small percentage of the prevalent pool since diagnosis currently requires an invasive liver biopsy.” Therefore, along with demonstrating a positive benefit/risk profile, AKRO will need to find patients and secure payer support should the candidate receive FDA approval, in Harrison’s opinion.That said, Harrison believes AKRO is up for the task. “We believe that given EFX’s clean safety profile and broad-based effects, Akero will likely largely overcome these commercial hurdles,” he commented.Harrison added, “Importantly, since Akero’s treatment is injectable, we only assume the drug will penetrate into the population of the most sick patients where there are currently at least 400,000 patients diagnosed and seeking treatment in the U.S.” To this end, he assigns a 60% probability of success, and estimates unadjusted peak sales for the U.S. and the EU will land at $4.5 billion.Based on all of the above, Harrison rates AKRO an Overweight (i.e. Buy) along with a $70 price target. Should his thesis play out, a potential twelve-month gain of 93% could be in the cards. (To watch Harrison’s track record, click here)Are other analysts in agreement? They are. Only Buy ratings, 6, in fact, have been issued in the last three months. Therefore, the message is clear: AKRO is a Strong Buy. Given the $58.50 average price target, shares could rise 61% in the next year. (See AKRO stock analysis on TipRanks)TransDigm Group (TDG)Next up we have TransDigm Group, which is one of the top producers, designers and suppliers of highly engineered aerospace components, systems and subsystems. Its products are used on nearly all commercial and military aircrafts in service today. Given its ability to weather the COVID-19 storm, Morgan Stanley sees a bright future ahead.Morgan Stanley analyst Kristine Liwag stated, “We view TransDigm as the most defensible business model in commercial aerospace.” However, this is not to say the company hasn’t been confronted with serious challenges.Over the past few years, management has had to grapple with how to price its defense business, the sustainability of its pricing strategy in aerospace, the durability of its levered balance sheet and the ability to weather a downturn. That said, Liwag remains optimistic going forward. “TDG has overcome short thesis after short thesis in the past few years and we do not expect these concerns to repeat,” she noted.According to Liwag, TDG’s “ability to hold on to margins during a global pandemic” conveys its operating strength. To this end, her estimate for EBITDA margins is well above the rest of the Street’s. The analyst also points out that the company cut its SG&A expense by $89 million year-over-year in fiscal Q3 2020. “We assume the company will retain at least half of those savings, with the remainder returning in the form of variable selling expenses,” she said.Liwag added, “We are positive on TransDigm, particularly as recovery in global air traffic would be favorable for TransDigm’s core profit maker, the aftermarket. Additionally, we view it positively that TDG has the means to acquire weaker players.”Back in April, management raised $1.5 billion of additional debt to trim liquidity risks and provide an extra cushion. “A large debt load is part of management’s strategy to provide private equity like return for its shareholders. Historically, the company has used debt to acquire businesses with similar attributes to TDG’s portfolio of 90% proprietary products and 75% sole sourced. If passenger air traffic continues to normalize, we would expect TDG to use its incremental capital to acquire struggling businesses that fit its strategy,” Liwag commented.All of this prompted Liwag to leave her bullish call and $772 price target unchanged. This target conveys her confidence in TDG’s ability to climb 48% higher in the next year. (To watch Liwag’s track record, click here)Looking at the consensus breakdown, 7 Buys and 5 Holds have been published in the last three months. Therefore, TDG gets a Moderate Buy consensus rating. Based on the $500.58 average price target, shares are poised to stay range-bound for now. (See TDG stock analysis on TipRanks)Cemex SAB (CX)Cemex counts itself as one of the leading players in the building materials industry, with the company manufacturing and distributing cement, ready-mix concrete and aggregates. As its risk/reward profile has just gotten more positive, now could be the time to snap up shares, so says Morgan Stanley.Covering the stock for Morgan Stanley, analyst Nikolaj Lippmann believes that CX’s bullish guidance for the third quarter and FY20, which was significantly ahead of consensus, was “the catalyst that builds a bridge to a favorable risk-reward shift.” On top of this, the stock is trading at 6.4 2020e EV/EBITDA, which is cheap compared to its historical performance and its peers, according to the analyst.That being said, Lippmann argues “CX is mainly a good, strong deleveraging story with a call option on what could be an exceptional U.S. cement market if the U.S. Congress approves an infrastructure package in 2021… If we get a U.S. infrastructure package beyond 2020, it would add icing to the cake, we think, and take the market from good to possibly great.”Although a large multi-year package is dependent upon the outcomes of the U.S. presidential and congressional elections, even in the base case, Lippmann expects cement to show pricing power in the U.S.It should be noted that Lippmann thinks it’s possible the next year will be relatively uneventful, but in that case, he expects the industry to pause at 90% capacity utilization and grow from there. On top of this, pricing in Mexico has been holding up. This “limits the downside risk materially and helps skew the risk-reward positively,” in Lippmann’s opinion.What else is working in CX’s favor? The cement demand year-to-date has pleasantly surprised Lippmann, with upside seen during the first stage of the pandemic. He points to DIY and Department of Transportation maintenance work during periods of low traffic, and strong residential construction as the drivers of this demand.Everything that CX has going for it convinced Lippmann to rate the stock an Overweight (i.e. Buy). Along with the call, he attached a $6 price target, suggesting 50% upside potential. (To watch Lippmann’s track record, click here)Turning to the rest of the analyst community, opinions are split almost evenly. 6 Buys and 5 Holds add up to a Moderate Buy consensus rating. At $4.16, the average price target implies 4% upside potential. (See Cemex 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.
Man arrested after hiding in teenager’s bedroom closet for more than a month
The Daily Beast
‘Fox & Friends’ Hosts Look On in Horror as Rudy Giuliani Blurts Out Biden Dementia Conspiracy Theory
Everyone knows that live television isn’t easy. Anything can go wrong—from a faulty connection, a verbal slip-up, or, as was the case on Tuesday morning’s Fox & Friends, Rudy Giuliani bellowing insane conspiracy theories at the nation with no obvious way to stop him.It’s always a risk to allow Giuliani to share his wildly unpredictable stream of consciousness live. The man who was named Time magazine’s Person of the Year for 2001 has long since been reduced to sharing the latest Trumpist conspiracy theories on any cable news channel that has the budget to cover any possible subsequent defamation lawsuits.This time, his F&F hosts looked on with visible horror in their eyes as Giuliani shared his completely baseless belief that Joe Biden is suffering from dementia. If you have the time, it’s worth watching the clip at least three times so you can see each of the hosts panicking in their own unique way as the former New York City mayor rambles on and on.> On Fox & Friends, Rudy Giuliani says Joe Biden “has dementia. There’s no doubt about it. I’ve talked to doctors. … The president’s quite right to say maybe he’s taken adderall.” The hosts get visibly uncomfortable. pic.twitter.com/2Ma7DKNBpS> > — Bobby Lewis (@revrrlewis) September 29, 2020With a mischievous cackle, Giuliani began: “The man [Biden] has dementia. There’s no doubt about it. I’ve talked to doctors. I’ve had them look at a hundred different tapes of his five years ago and today.” Trying his very best to shut Giuliani down, host Steve Doocy interjected that Biden’s team has said the Democrat has no serious medical problems.Giuliani then made an extraordinary noise at Doocy that can best be typed as “Oowughawughawugh,” before continuing: “He can’t recite the Pledge of Allegiance and he’s fine? He was in the Senate for 160 years? I mean, he can’t do the prologue to the… to the… con… to the… uh… Constitution of the United States or the Declaration of Independence, any of them.”Getting louder and increasingly excited about his armchair diagnosis, Giuliani went on: “He can’t do NUMBERS. Wow, are the numbers screwed up. He actually displays symptoms that two gerontologists told me are classic symptoms of middle level dementia.” Doocy and co-host Ainsley Earhardt both responded to that claim by softly saying, “Right.” The third host, Brian Kilmeade, can just be seen blinking rapidly.Fox News Lobotomizes Its ‘Brain Room,’ Cuts Fact-Based JournalismNevertheless, Giuliani persisted. “That’s when [Biden] does that ‘I pledge allegiance to the United States… uh… uh… um… I think,’ he’s done that twice,” said the ex mayor. “That’s a classic symptom in the DSM-V, it’s the fifth symptom, of dementia, he’s got eight of the 10.”Then, seemingly remembering that he was on the show to talk about tonight’s presidential debate, he went on: “Look, that isn’t the debate. He can get through it. I think the president is quite right to say maybe he’s taken Adderall or some kind of attention deficit disorder thing.”As Giuliani began pulling prescription medicine brands out of the air, Doocy had finally had enough and told him firmly, “None of us are doctors, that is your opinion.” Giuliani fought back, saying it was actually the opinion of some very professional-sounding doctors that he knows.But the game was up. Kilmeade, in his first verbal interjection of the entire exchange, said with exasperation, “We can stay away from that.” Earhardt then moved on to pick Giuliani’s brain on the Supreme Court.This particular line of attack is one that Giuliani—whose work as President Trump’s lawyer and top dirt-digger on Hunter and Joe Biden kicked off a chain of events that got his client impeached last year—has enthusiastically embraced as one of his primary functions now for Team Trump.Shortly before midnight on Monday night, Giuliani started texting The Daily Beast to say that Trump did “great” in recent White House debate prep (for which the president said on Sunday that Giuliani and former New Jersey governor Chris Christie took part), and to rail against Biden as a “senile,” “broken down old crook” who’s supposedly suffering from “dementia” and needs “ADD drugs” to get through the Tuesday debate. The Trump attorney also claimed that someone had told him how stupid Biden was in law school.Giuliani also mentioned late Monday evening that he’d be flying with Trump on Air Force One on Tuesday and would be at the Cleveland debate. Asked about what kinds of questions he peppered the president with during the prep, the former New York City mayor replied, “It really doesn’t work like that with him. It’s much more of a discussion rather than a rehearsal. Plus you are dealing with a very smart, very alert human being, not a senile old man.”Read more at The Daily Beast.Get our top stories in your inbox every day. Sign up now!Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.
Magnite Inc. (MGNI): Hedge Funds Are Snapping Up
The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the […]
Mass airline furloughs as Congress fails to reach deal
Upwards of 50,000 airline workers could be furloughed starting Thursday morning, after Congress failed to pass a last-minute deal to extend coronavirus relief aid to the embattled industry.
American Airlines CEO Doug Parker confirmed late Wednesday that his airline would go ahead with 19,000 layoffs, but said it would “reverse” them if a deal were reached.
Substantial progress on the deal could not be made before the time limit, Treasury Secretary Steven Mnuchin told Fox Business on Wednesday night.
Talks on an overall additional coronavirus relief package, including airline support, will continue Thursday, Mnuchin said, noting that “there’s money for airlines.”
However, those talks could be too late for many in the industry.
“While government leaders have stated they will continue talks tomorrow, for many pilots, tomorrow will be too late — their jobs will already be gone,” said Joe DePete, president of the Air Line Pilots Association, in a statement released Wednesday night. “The consequences of this inaction has a serious impact on those who are set to be furloughed at midnight tonight.”
Amanda Steinbrunn, a flight attendant who has been with United Airlines for five years, told NBC News, “I feel like I’m being left behind and there’s nothing we can do. It’s extremely out of our hands, and we’re just sitting around terrified.”
She herself contracted Covid-19, recovered — and went on to help transport nurses and doctors. Last month the airline told her that she would “absolutely” be losing her job Oct. 1 if there was no extension passed to the payroll support program, she said. “I don’t have a backup plan. I’m going to be on the unemployment line like so many other people.”
In May, Congress passed HEROES Act legislation that bailed out nearly 75 percent of the airline’s payroll expenses with $25 billion in grants and $25 billion in loans, with another $10 billion for cargo airlines, with the stipulation that airlines not let any workers go until Oct. 1. At stake are close to 50,000 jobs for pilots, flight attendants, baggage handlers, counter agents and other airline and airport personnel.
It was expected that, by October, the U.S. would have had enough time to get the coronavirus under control and return to more typical travel and expenditure levels. However, garbled national guidance and inconsistent adherence to safety precautions squandered the bought time for travel and other industries.
Now, airline workers are hanging on for hopes of assistance from Congress to save their livelihoods.
“Without aid from the federal government, I will be laid off on October 1 and will lose my paycheck and my health insurance,” said Toni Valentine, who works for United Airlines Reservations in Detroit. “Hundreds of thousands of airline workers are facing financial ruin through no fault of our own. How will we take care of our families without a paycheck and health insurance?” she said.
After hitting rock bottom during coronavirus lockdowns, airline travel began to slowly rise again, but has plateaued well below previous year-over-year average levels. Despite new cleaning procedures from the airlines, passengers so far are largely unwilling to fly unless they have to, absent a safe and widely available vaccine.
Airlines have been feverishly negotiating with their labor unions and offering deals to employees to try to pursue all available options to reduce or delay costs and cuts, such as early retirement and long-term sabbaticals. Hard-hit commercial legacy carriers in particular have been under pressure.
United Airlines negotiated a deal with its pilot union to avoid furloughs until at least June 2021, but the rest of their workforce still faces furloughs, the company announced Monday. Last week, Delta announced it would delay furloughs until Nov. 1, allowing the airline more time to assess its financial situation. American Airlines is still on track to begin furloughs on Oct. 1 across its workforce.
“The airline industry and many of its employees are like Thelma and Louise, racing toward the abyss,” independent aviation analyst Bob Mann told NBC News in an email. “We’ve seen the movie. So, absent a rescue, we know the ending.”
But he said that reaching deeper into the government pockets to keep the industry afloat was well within the country’s interest.
“Does the nation want an airline industry ready to drive the economy when vaccines have been widely administered? If so, pay up, now, to keep the industry vital until then,” he said.
The critical national infrastructure that the airline industry provides — and that will be key to the nation’s economic recovery — could be severely affected by the sweeping industry cuts, Parker told NBC News earlier this month. “We want to make sure that when the economy recovers, we are here.”
Many airline hubs are located in swing states, so the proposed cuts are in areas President Donald Trump needs to win, come Nov. 3. That could put pressure on his Republican allies in Congress to make a deal with Democrats.
Labor unions have strongly urged Congress to step up.
“The Machinists Union stands shoulder to shoulder with House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer in their effort to get a coronavirus relief package passed for all Americans,” said Robert Martinez Jr., president of the International Association of Machinists and Aerospace Workers.
“It is an outrage that working families have already waited more than four months since the House passed the HEROES Act,” Martinez said. “The Machinists Union will do anything to support our membership and the tens of thousands of our airline members who will be laid off on Oct. 1.”
A major U.S. carrier could even be forced out of business, one industry leader cautioned earlier in the pandemic.
“I don’t want to get too predictive on that subject. But yes, most likely,” Boeing CEO David Calhoun said in an interview with Savannah Guthrie on NBC’s “TODAY” show in May, when asked if he thought a major U.S. carrier would have to go out of business.
“Something will happen when September comes around [and the aid expires]. Traffic levels will not be back to 100 percent. They won’t even be back to 25 percent. So there will definitely be adjustments that have to be made on the part of the airlines,” Calhoun said.
- Wisconsin school worker jailed for exposing herself to student
- James, Herro see popularity rise in the NBA playoffs
- Man arrested after hiding in teenager’s bedroom closet for more than a month
- Magnite Inc. (MGNI): Hedge Funds Are Snapping Up
- Chelsea boss Lampard pleased with Mendy debut despite Carabao Cup exit to Tottenham
- Michigan football losing former 4-star recruit LB Osman Savage to transfer portal
- Mass airline furloughs as Congress fails to reach deal
- Former Audi chief on trial in VW diesel emissions scandal
- I’ve grown since time with Indians
- Lakers vs. Heat live score, updates, highlights from Game 1 of the 2020 NBA Finals
Sports News6 days ago
US Olympian Chloe Dygert crashes over guardrail in cycling accident
Entertainment2 weeks ago
Danish TV show ‘Ultra Strips Down’ records kids eyeing naked adults
Sports News4 weeks ago
Fantasy Football Auction Draft strategy: Tips, advice for spending your 2020 player budget wisely
Sports News4 weeks ago
NBA 2K21 Cover Star Damian Lillard Reveals His Issues With the Game
Tech1 week ago
iOS 14 basics: how to add widgets to your iPhone’s home screen
Sports News1 week ago
Fantasy Football Buy-Low, Sell-High Stock Watch: Leonard Fournette, Stefon Diggs among movers heading into Week 3
Sports News4 weeks ago
NBA playoff bracket 2020: Updated standings, seeds & results from each round
Sports News2 weeks ago
College basketball’s 2020-21 season is officially happening, even if the details are murky