The 2 stocks chosen by JP Morgan with an upside potential of more than 80%


Less than two weeks after the start of the new year, the key question arises: should we buy the decline? The markets are fading a bit, so far in January. The S&P 500 and NASDAQ both record losses in the cumulative trading sessions of 2022 – 2% on the S&P and 4.5% on the NASDAQ.

A combination of headwinds and tailwinds is pushing stocks. The former include the Omicron wave of COVID-19, as well as the ongoing disruptions in supply chains and labor markets. On the bright side, Omicron appears to be both less dangerous and more contagious, leading to the possibility of mass natural immunity with fewer deaths, and heralding the end in sight of the pandemic. And, the Federal Reserve is signaling that it will start raising interest rates later this year. The move promises to dampen rising inflation rates, with long-term benefits.

Overall, there is room for optimism, as Marko Kolanovic, global markets strategist at JPMorgan, pointed out: the fear of Omicron needs to be addressed. The new variant turns out to be more fluid and the negative impact on mobility much more manageable. “

Regarding the general economic situation, Kolanovic adds: “Inventories are very low and the labor market remains strong. We continue to see earnings gains and believe the consensus projections for 2022 will turn out to be too low again. “

With that in mind, we wanted to take a closer look at two stocks that have received approval from JPMorgan, with the company predicting upside potential of over 80% for each. Using the TipRanks database, we found out that the rest of the street is on board and both have achieved a ‘Strong Buy’ consensus rating.

Driven Brands Holdings (DRVN)

We’ll start with Driven Brands, the largest auto services company in North America. Driven Brands is a holding company which operates a wide variety of automotive service points through its subsidiaries. Services are offered in four divisions, including Maintenance; Painting, collision and glass; Platform services; and car wash. Brands include well-known names such as Meineke, Take 5 Oil Change, Maaco, and Automotive Training Institute. There are over 4,200 branded locations, most of which are franchise-owned and operated.

Driven held its IPO in January last year and raised more than $ 650 million in net proceeds from the offering. The company’s shares have been volatile over the past year, but remain well above the original price of $ 22.

Since the IPO, Driven has published four quarterly financial reports. Income increased during the summer; third quarter profit of $ 371 million increased 39% year-over-year and same-store sales increased 12.8%. Current earnings were positive at 26 cents per share, up 30% year-over-year. The company added 53 stores during the third quarter.

This growth goes hand in hand with economic reopening. When people are on the move, they drive – and that means their cars will need maintenance and accessories. The growth of the company continued after the third quarter; Since that quarterly, the company has announced expansions in its car wash and automotive glazing segments. The company acquired its 100th car wash since August 2020 in November and now has over 300 car wash locations, while earlier this month Driven announced its acquisition of Auto Glass Now, with 75 locations in the auto glass repair segment.

JPMorgan 5-Star Analyst Christopher Horvers is bullish on DRVN for this year, writing the action: “We continue to view DRVN as one of the most differentiated stories in our coverage… DRVN ticks many boxes in 2022 , given favorable recovery dynamics (i.e. kilometers traveled still less than 2019 with kilometers of congestion lagging behind), (2) the power to set prices largely offsetting cost inflation (labor and goods) , (3) fewer competitors after COVID, (4) significant upward bias in estimates, (5) potential for structural revaluation, and (6) general defensive bias emphasizing perceived asset quality. “

Consistent with his bullish approach, Horvers ranks DRVN stocks an overweight (i.e. buy) rating and his price target of $ 15 suggests an impressive upside potential of around 83% for the year. . future. (To look at Horvers’ record, Click here)

Overall, there are currently 4 Driven Brands analyst reviews registered, and they all agree: this is a buy action. This makes the consensual purchase note very unanimous. DRVN shares are selling for $ 30.54, and their average price target of $ 45 implies that they have upside potential of around 47% year on year. (See the analysis of DRVN shares on TipRanks)

Edgewise Therapeutics (EWTX)

The second title we’ll be looking at is Edgewise Therapeutics, a clinical-stage biopharmaceutical company focused on the treatment of musculoskeletal diseases. The company is developing new orally administered small molecule therapies for rare muscle disorders with severe and debilitating effects. Targeted disorders include Duchenne and Becker muscular dystrophy (DMD and BMD), spasticity disorders and neuromuscular metabolic disorders.

Most of Edgewise’s research leads are still in preclinical testing, but the DMD / BMD program has reached Phase 1 clinical trials. Early results from EDG-5506, a muscle drug candidate from the stabilizer class, were released earlier this month and showed the drug candidate to be well tolerated in patients with no adverse events occurring. The drug also showed significant results, beyond predicted levels, reduced muscle concentrations and biomarkers of muscle damage in adult BMD patients after two weeks of treatment. These are important positive results for a first clinical trial in humans and warrant further trials with EDG-5506.

Tessa Romero of JPMorgan describes the clinical trial data as a ‘victory’, noting: ‘In our opinion, the key aspects that made the update a clear success include: 1) a significant and temporal decrease in the major biomarkers of muscle damage; 2) Favorable PK consistent with robust target engagement (eg, achieving exposures exceeding pharmacologically active levels seen in diseased preclinical models, both in plasma / muscle); and 3) the name of the expected safety / tolerability issues. “

“With the initial proof of concept (POC) data with the EDG-5506 aided by biological and functional response markers in hand, we see the potential for creating substantial value over time on the potential of EDG. . -5506 alone, with a platform to follow it, ”Romero summed up.

Based on these comments, Romero lists Edgewise as a “flagship” for 2022. The JPMorgan analyst assesses the stock’s overweight (i.e. buy) with a price target of $ 33. If the goal is met, a twelve month gain in the form of an 82% could be in store. (To look at Romero’s background, Click here)

Overall, Edgewise enjoys a strong buying consensus, based on three recent analyst reviews. The shares are trading at $ 18.10 and have an average price target of $ 32, which implies a rise over the next 12 months of around 77%. (See the analysis of EWTX stocks on TipRanks)

To find great ideas for trading stocks at attractive valuations, visit TipRanks Best Stocks To Buy, a recently launched tool that brings together all the information about TipRanks stocks.

Warning: The opinions expressed in this article are solely those of the analysts presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.


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