The markets went into bloodbath mode on Thursday as all the main indexes tumbled by at least 3%, with the NASDAQ’s 5% drop the most acute. That represented the tech-heavy index’s biggest one-day dive since June 2020.
The force of the plunge confirms what we all know by now – the market headwinds are piling up, one upon the other. At its base, the issue is simple: there are too many problems, coming in too fast, and both the impersonal markets and the individual investors are finding it difficult to keep up.
The nature of the obstacles is also well known by this point. A combination of COVID and responses; high inflation, goosed by too much government stimulus, the central banks’ prolonged policies of near-zero interest rates; the supply chain disruptions, initially sparked by the pandemic but exacerbated by inflation; and the Russia-Ukraine war, which has added fuel to all of that. It all adds up to the most difficult macroeconomic picture since the Carter Administration.
But the news doesn’t have to be all doom and gloom. As Oppenheimer’s chief investment strategist John Stoltzfus reminds us, these kind of difficulties also open avenues for success: “The longer one survives the process of volatility sourced in financial, health and geopolitical related issues as well as the day to day of whatever rattles, conjures, and drives the markets—the more one comes to realize that challenging times provide valuable experience from which to profit from ideas and innovation that come from meeting whatever are the challenges at hand.”
Applying Stolzfus’ take to its recommendations, Oppenheimer is pounding the table on two stocks in particular. Noting that both have solid long-term growth prospects, the firm’s analysts believe each has at least 80% upside potential. After running the tickers through TipRanks’ database, it’s clear the rest of the Street is in agreement, with each earning a “Strong Buy” consensus rating.
We’ll start with a European medical device company, Nyxoah. Based in Belgium, this firm is working on a treatment for obstructive sleep apnea (OSA), a common breathing disorder that affects well over 900 million people worldwide. More than 400 million patients in that potential population suffer from OSA severe enough to require treatment – and a large portion of them have proven unable to tolerate traditional positive airway pressure therapies. This is Nyxoah’s patient base for its Genio device, a battery-free hypoglossal nerve stimulator developed for single-incision implementation. The device’s operation is intended to keep the upper airway open so the patient can sleep.
Nyxoah has an active clinical trial program testing the Genio device, and in March the company released data on its BETTER SLEEP study. This trial, which involved 42 patients in Australia, met all of the primary endpoints across all the patient cohorts. The success of the BETTER SLEEP trial is the basis for the company’s next clinical study, the pivotal DREAM trial. The study is currently enrolling patients and is expected to run into next year.
The company has also begun commercialization activities of the Genio product in the German market, and generated 852K Euros (US$ 900K) in revenue last year.
Ongoing clinical trials and preparation for a commercial launch are expensive activities, and to raise capital, Nyxoah held an IPO in July of 2021. The event saw the NYXH ticker debut on the NASDAQ, with 2.835 million shares sold at $30 each. The IPO raised $97.8 million in new capital for the company, and Nyxoah was able to finish the year with 135.5 million (US$143.3 million) in cash reserves.
Covering this company for Oppenheimer, analyst Suraj Kalia outlines why he believes that the DREAM trial is the key catalyst ahead, writing, “Final readouts from the pivotal study DREAM, expected summer CY23, should provide definitive proof as to whether or not bHGNS (bilateral hypoglossal nerve stim) ‘might’ provide an incrementally more efficacious approach vs. unilateral (uHGNS), liberalize patient selection criteria somewhat, and improve leverageability in the business model.”
“For sure,” Kalia went on to write, “this is soon going to become a dogfight between the unilateral vs. bilateral camp believers. We believe that if execution and clinical risk are managed, the Nyxoah story presents an attractive entry point, with key elements of strategic attractiveness.”
These comments support Kalia’s Outperform (Buy) rating, and his $30 price target indicates room for 104% share appreciation by year’s end. (To watch Kalia’s track record, click here)
This company has not been in the public markets for very long, but it already has 5 analyst reviews on record. These reviews include 4 to Buy and 1 to Hold, for a Strong Buy consensus rating. The shares are priced at $14.72 and their $29.10 average price target suggests a 98% one-year upside. (See NYXH stock forecast on TipRanks)
Modular Medical (MODD)
Sticking with the medical device sector, we’ll move on to Modular Medical. This company is entering the highly competitive market in the treatment of diabetes; Modular is working on the development and commercialization of a new insulin pump for the management of Type 1 diabetes. This life-long, chronic, uncurable condition affects more than 1.9 million people in the US alone – and can be treated and managed with regular doses of insulin. Insulin pump technology was invented to make dosing easier for patients – the pump device is wearable, and can be programmed to deliver the correct dose at the correct time, avoiding multiple self-administered daily injections.
There are already multiple models of insulin pumps on the market, and 32% of the total patient population uses a pump device. To build an entry into this market, Modular Medical is targeting the ‘almost pumpers,’ a patient population that currently does not use a pump but would if: pumps were less expensive; easier to use; and perceived as lower tech.
Enter Modular Medical’s pump, the MODD1, an accessible technology to make diabetes control easier for patients. The pump is designed to be easy to learn and use, with several disposable parts, including a replaceable single-use battery. At the same time, the MODD1 features the same large insulin reservoir as more expensive current models. The pump is assembled in two main parts, a 90-day reusable section and a 3-day disposable section.
Modular Medical went public only in February of this year, in an IPO that was cut back from its original filing. The company put 2.5 million shares on the market, at $6 each, and raised $15 million in gross proceeds.
In his review of Modular Medical, Oppenheimer’s Steven Lichtman notes the risks involved, but points out the key factors that are likely to support the stock. He writes, “MODD1 is designed for low-cost manufacturing; with this flexibility management expects to provide the reusable pump component for free (opening pharmacy channel access) and offer free customer samples as well as co-pay assistance. MODD1 will have on-body wear and a simple (easy to train) insulin administration regimen. The pump was developed by founder, industry veteran and Tandem founder Paul DiPerna. There are risks—MODD1 is pre-approval and the pump market is highly competitive. But, with its new design, MODD is looking to expand a large, underpenetrated market.”
In light of these comments, the 5-star analyst rates the shares as Outperform (a Buy) and sets an $8 price target implying an 89% one-year upside. (To watch Lichtman’s track record, click here)
Modular Medical has already picked up 3 analyst reviews and they are all positive, making for a Strong Buy consensus rating. The $9 average price target is even more bullish than Lichtman will allow and suggests a 98% upside from the current trading price of $4.23. (See MODD stock forecast on 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.