Markets are up this year – that’s no news, the gains have been substantial and sustained – but recent weeks have made investors nervous. The resurgence of COVID, rising inflation and stubbornly high unemployment have already made headlines, but new problems are coming up overseas. In China, for example, a developing debt crisis in the giant Evergrande Group threatens to upend that country’s lending system.

So, after a full nine months of gains this year, the stock markets are looking at the real possibility of their first large drop. But according to Goldman Sachs’ chief of global equity strategy, Peter Oppenheimer, this is the beginning of an opportunity. Oppenheimer believes that investors should prepare to ‘buy the dip,’ and get into the stock market should prices fall.

“I think fundamentally that’s probably a good time to be getting back in. Fundamentally, we’re still in the relatively early stages of this economic cycle,” Oppenheimer noted.

PMV Pharmaceuticals (PMVP)

Fist up, PMV Pharma, is a precision medicine company focused on the treatment of cancer through investigation of the p53 suppressor protein. This gene is well-known as a tumor suppressor, and as many as half of all human cancers include mutations in the p53 gene. PMV is working to create personalized cancer treatments, patient-specific based on particular p53 mutations.

The p53 gene activates in response to DNA damage, which is frequently implicated in tumor formation. Mutations of p53 cause the protein products of the gene action to lose their tumor suppressing function, allowing cancers to grow unchecked. PMV is working to develop treatments based on small-molecule therapeutics that selectively target mutated p53, to restore its natural anti-tumor function.

PMV has two drug candidates in its development pipeline. One is still in preclinical stages, but the other, PC14586, is starting Phase 1 clinical trial. Enrollment in the trial is ongoing, and 12 clinical testing sites have been selected in the US. The company has successfully acquired a Fast Track designation from the FDA for PC14586.

Goldman Sachs' Paul Choi is impressed with PMV’s potential, writing of the company: “Although investor expectations are admittedly varied, with shares having traded sideways for most of 2021, we think PMVP presents an attractive risk/reward into upcoming Phase 1 data… with even modest success here relative to a low clinical hurdle potentially driving meaningful upside given that p53 (like KRAS) remains one of the untapped white spaces within oncology.”

To this end, Choi gives the stock a Buy rating along with a $43 price target. Should his thesis play out, a twelve-month gain of ~46% could potentially be in the cards.

The rest of the Street supports Choi's thesis. In fact, the average price target is even more upbeat; at $59.25, the figure is expected to yield 12-month returns of ~101%. The stock boasts a Strong Buy consensus rating, based on 4 Buys and 1 Hold.

Stellantis (STLA)

Now let’s shift gears and take a look at an automotive company. Stellantis is a European conglomerate, based in the Netherlands and formed from the merger of Groupe PSA, from France, and Fiat-Chrysler, the Italian-American auto company which came into being form a previous merger, between Fiat and Detroit’s Chrysler. Thus, Stellantis brings together several of the world’s major auto companies into one entity. The company claims ownership of some of the industry’s best-known names, including Maserati and Alpha Romeo, Jeep and Dodge Ram. It is now the world’ sixth largest automaker.

Since forming in January of this year, Stallantis’ shares have gained approximately one-third in value. The company came into being just as the COVID crisis was starting to abate, and its revenues, reported for the first half of this year, came to $84 billion. The company claimed $7 billion in profit for 1H21, along with $61 billion in liquid assets. Stellantis is planning to move into the US electric car market, with electric versions of recognized brands such as Dodge Ram 1500 and the Jeep Wrangler.

The company is making moves to expand its presence in both the financing and EV segments of the auto markets. Early this month, the auto maker announced an agreement to acquire the financial services company F1 Holdings. The acquisition will give Stellantis a stronger entry into the US automotive financing market. And in a move that continues its development of a European battery producer, Stellantis and its partner TotalEnergies have added Mercedes-Benz to their Automotive Cells Company initiative. The goal is to develop ACC’s manufacturing capacity to 120 GWh by the year 2030.

In his coverage of Stallantis for Goldman Sachs, George Galliers points out that auto makers have faced recent headwinds, primarily from the semiconductor chip shortage and related supply line disruptions. However, he is bullish on Stellantis’ prospects, especially due to the company’s strong product line.

“Stellantis should continue to benefit in the coming quarters from the introduction of new models. The 3 row Grand Cherokee continues to see strong traction helping GC sales to grow +49% in July/August. Meanwhile, the introduction of the 2 row variant and the commencement of shipments of the Grand Wagoneer and Wagoneer will benefit the back end of the year - not only in terms of volume but also price/mix,” Galliers opined.

Everything STLA has going for it prompted Galliers to take a bullish stance. The analyst rates the stock a Buy and gives it a $32 price target, indicating a one-year upside of 60%.

That the Goldman view is representative of the Street’s outlook is clear from the unanimous Strong Buy consensus rating, based on no fewer than 9 positive reviews in recent weeks. Stellantis shares are trading for $19.74 and their $28.58 average price target suggests the stock has room to gain an additional 45% in the coming year.

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish.