January saw the markets start off the new year with strong gains, while February has seen them level off. In the last two weeks, the main indexes have seen range-bound trading; investor sentiment remains upbeat for now, but there is some doubt about where stocks are headed longer-term.
It is an environment that makes it hard to find the potential winners. What’s needed is a tool to cut through the uncertainty. The Smart Score tool, at TipRanks, is designed to do just that. At base, the tools collects and collates data – and then measures it against a set of 8 factors all known as solid predictors of future outperformance. The Smart Score itself is a single-digit score, distilled from the data set and presented on a scale of 1 to 10, from lowest to highest. A ‘perfect 10,’ the highest possible, indicates a stock for which the stars have aligned – and one that investors should give a second look.
We’ve dipped into the TipRanks database to pull up the details on two stocks that are each showing that ‘Perfect 10’ Smart Score. According to the data, these are both Strong Buy equities with plenty of upside potential. Let’s find out what else recommends them, what’s backing their Smart Scores, and what the analysts are thinking.
Rain Oncology, Inc. (RAIN)
We’ll start with Rain Oncology, formerly called Rain Therapeutics. This is a clinical-stage biopharmaceutical firm, researching new anti-cancer precision medicines based on genetic matching of the treatment to the patient. The methodology is designed to maximize success while minimizing side effects.
The company currently has two drug candidates in the pipeline, milademetan, which has several clinical trials in progress, and RAD52, which is still undergoing pre-clinical research.
Milademetan is making the headlines here. The drug candidate’s leading clinical trial, the Phase 3 MANTRA trial in the treatment of liposarcoma, has enrolled 160 patients and the company expects to release initial data during 2Q23, which unfortunately earlier this month the company pushed back from the previously anticipated Q1 readout.
This drug candidate is also undergoing the MANTRA-2 study, a Phase 2 trial of safety and efficacy in the treatment of MDM2-amplified solid tumors in patients with advanced or metastatic disease. The study has a target enrollment of 65 patients.
Late last month, the company published Phase 1 clinical data from the milademetan trials against a range of tumor types. The published data, in the Journal of Clinical Oncology, showed positive anti-tumor activity and tolerability profiles using intermittent dosages.
On the financial side, at the end of Q3, Rain had $90.7 million in cash and liquid assets on hand. Following the November earnings release, the company raised $50 million from a follow-on stock offering.
Turning to Rain’s Smart Score, we find that the ‘Perfect 10’ gets support from solid blogger and crowd wisdom sentiment, as well as hedge fund and insider purchases. On the first, the financial bloggers are 100% bullish on RAIN, while the crowd wisdom shows a 54% positive trend over the last 30 days. On the second, corporate insiders bought more than $987,000 worth of shares in the last three months, while of the hedges tracked by TipRanks, holdings in RAIN increased by 3.7 million shares last quarter.
In coverage of this stock for Roth MKM, Kumaraguru Raja takes a favorable view of the delay in the milademetan data release, writing, “We believe that the delay is due to lack of accrual of the required 105 PFS (progression-free survival) events for the final PFS analysis, potentially due to better performance of either of the trial arms. We remain optimistic and expect milademetan to outperform trabectedin based on historic PFS seen with trabectedin, and milademetan PFS in Phase 1 trial… We believe that milademetan has substantial opportunity in cancers where MDM2 and p53 are key drivers.”
To this end, along with a Buy rating, Raja gives RAIN shares a price target of $21, implying a robust one-year upside potential of 121%. (To watch Raja’s track record, click here.)
All 7 of the recent analyst reviews on Rain’s shares are positive, giving the stock its unanimous Strong Buy consensus rating. RAIN is currently priced at $9.50, and its $19.43 average price target suggests a 104% upside in the next 12 months. (See Rain’s stock forecast at TipRanks.)
Cabaletta Bio (CABA)
Next up is Cabaletta Bio, another research-oriented biopharmaceutical company. Cabaletta’s research targets the treatment of autoimmune diseases, a class of illnesses that has long defied efforts at effective treatment. The company is using a cell therapy approach, based on the observed successes of T cell therapies in combatting various cancers. Cabaletta is working on chimeric antigen receptor T cells for autoimmunity (CARTA), to create new therapeutic agents for recalcitrant autoimmune illnesses.
Cabaletta has been generating some buzz through its drug candidate CABA-201, described as a “newly designed, fully human CD19 chimeric antigen receptor (CAR) containing a 4-1BB co-stimulatory domain.” This drug candidate was added to the pipeline last fall, and has shown potential in the treatment of conditions such as myositis and systemic sclerosis, rheumatoid arthritis, and other B cell related autoimmune conditions. Cabaletta is investigating this drug candidate on an exclusive, worldwide license obtained from Nanjing IASO Biotherapeutics, and anticipates submitting the Investigational New Drug application to the FDA during 1H23.
A successful IND for CABA-201 will add that drug candidate to a clinical pipeline that already includes DSG3-CAART, an investigational treatment for mPV, mucosal pemphigus vulgaris. This is a skin blistering disease with few current treatment options and DSG3-CAART is designed to attack affected antibodies without impacting unaffected B cells. The drug candidate is currently at the Phase 1 stage, and Cabaletta reported favorable safety data in October of last year.
Turning to the financials, Cabaletta’s last quarterly report showed a cash balance of $85.9 million, following which, in December, the company announced a $35 million stock offering.
This company’s Smart Score shows several positive metrics. Hedge fund managers bought into this stock last quarter, to the tune of 2.9 million shares, while the crowd wisdom showed a 9% positive increase in the last 30 days. Financial bloggers, who are usually a pretty fickle lot, were 100% bullish on CABA shares, and on the technicals, the company’s 12-months-change registered an impressive 213% positive momentum. All of this adds up to a Perfect 10.
Analyst Michael Ulz has looked into the detail of Cabaletta for investment bank Morgan Stanley, and he sees the company’s upcoming regulatory filings as the prime catalyst. Of this development, Ulz writes, “[The] IND filing for CABA-201 is expected in 1H23, setting the stage for initial Ph1 data in 1H24, which we expect to drive upside. Our positive expectations are driven by a combination of: 1)groundbreaking results from an academic study (reset immune system in 5/5 SLE patients) also using a CD19 CAR-T,2) CABA201’s similar design (validated humanized CD19 binder and same 4-1BB costimulatory domain),and 3) a management team experienced in developing cell therapies for autoimmune disease.”
These comments back up Ulz’s Overweight (or Buy) rating on CABA shares, and his $16 price target indicates his confidence in an upside potential of 102% for the coming year. (To watch Ulz’s track record, click here.)
Cabaletta Bio has picked up 5 recent analyst reviews, and all are positive, making the consensus view here a Strong Buy. The stock is selling for $7.93 and has an average price target of $13.80; this points toward a gain of 74% for the year ahead. (See Cabaletta’s stock forecast at 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.