Market watchers are widely predicting that this week’s Q2 GDP print will show a contraction – which make two quarters in a row, the definition of a recession. Consumer sentiment reports have shown that John Q. Public agrees with this assessment, and has for the last couple of months, and markets bear that out. Even after a recent rally, stocks remain down 17% year-to-date on the S&P 500 and a deeper 25% on the NASDAQ.
The market turndown, however, brought plenty of stocks into discount trading territory. These aren’t necessarily unsound stocks; rather, many strong equities are simply carried down by the general market trend. The result is a large number of ‘Strong Buys’ hovering at rock-bottom discounts. For bargain-hunting investors, it’s a target-rich environment.
So let’s take a look at some of those rich targets. We’ve used the TipRanks platform to pull up details on two stocks, each of which has fallen more than 50% so far this year and yet retains a Strong Buy rating from the analyst consensus and a strong upside potential.
OptimizeRx Corporation (OPRX)
The first stock we’re looking at is OptimizeRx, a digital tech company operating in the healthcare field. OptimizeRx offers customers and users a platform designed to connect patients, healthcare providers, and life sciences organizations in a seamless link, allowing each to access information and provide answers, making healthcare delivery both more precise and more efficient at the point of care.
By the numbers, OptimizeRx has shown real results to benefit both patients and physicians. The network can reach upwards of 60% of US physicians and boasts an 86% physician engagement with its in-workflow messaging. For patients, the system is linked to a 12% increase in days on therapy when treating chronic conditions.
Turning to the financial results, we find that OptimizeRx showed a 22% year-over-year revenue gain in 1Q22, from $11.2 million to $13.7 million. This came along with an increase in gross margins, as well, from 55% to 59%. The company reported a net loss in Q1, of 1 cent per diluted share in non-GAAP terms, in line with forecasts.
While the financial results show growth or met expectations, shares in OPRX have fallen 66% so far this year.
For SVB analyst Joy Zhang, all of this adds up to a company that investors need to pay attention to.
“OPRX enables pharma to communicate with physicians at the point of care and is a pureplay beneficiary of the ongoing shift from in person sales reps to digital advertising. Beyond the secular tailwind, OPRX enjoys a solid financial profile of 30%+ top-line growth and mid-teens adj. EBITDA margins. Despite this, valuation is cheap — OPRX’s currently trades at an ~2.5 turn discount to pharma digital marketing peers and an ~10 turn discount to its closest comp DOCS,” Zhang opined.
Alongside these comments, Zhang puts an Outperform (i.e. Buy) rating on the stock, along with a $38 price target suggesting an upside of ~78% for the coming year. (To watch Zhang’s track record, click here)
Overall, OptimizeRx has picked up 5 recent analyst reviews from the Street’s analysts, and these include 4 Buys to 1 Hold for a Strong Buy consensus. The $47.80 average price target indicates potential for a 126% upside from the current trading price of $21.19. (See OPRX stock forecast on TipRanks)
Integral Ad Science (IAS)
Sticking with tech, we’ll move from healthcare to digital media and advertising, where Integral Ad Science is a major player. The company specializes in digital marketing and data analysis, ensures that ads and media are properly targeted for the move efficient and effective deployment, and addresses customers’ issues of brand risk, fraud, and ad content and viewability, so that digital media campaigns will bring in the strongest possible results. Integral was founded in 2009 and went public last year.
Since entering the public trading markets, IAS has seen just over 12 full months of trading – and in that time, the stock has fallen sharply. Some 59% of the loss has come just in this year.
A key point for IAS will come in early August, when the company reports its 2Q22 financial results. In Q1, the IAS showed a top line result of $89.2 million, up 33% year-over-year. This included a 53% increase in programmatic revenue. Net income came in at just $1.2 million – but that was enough for a 1-cent EPS profit, the first positive EPS since IAS went public last June.
Covering the stock for Raymond James, analyst Andrew Marok writes that he remains “confident in the opportunity in front of IAS,” including among his reasons: “1) Our impression is that IAS is less impacted by macro headwinds to date than SNAP; 2) Context Control remains a key driver of the story, with plenty of room to run; 3) social integrations are proving a key differentiator, with increasing momentum into 2H; 4) Publica scaling well, key to IAS’s CTV strategy; 5) international still a major focus despite 1Q hiccups.”
Marok believes that IAS will outperform through the balance of 2022, and rates the stock a Strong Buy. His price target of $20 implies a 126% upside on the one-year time horizon. (To watch Marok’s track record, click here)
Digital tech firms, especially those involved in online advertising and marketing, have never had any difficulty getting attention from the Street’s analysts, and Integral Ad Science is no exception. The company has received 9 analyst reviews in recent weeks, and these break down to 8 Buys against just a single Hold, supporting the Strong Buy consensus rating from the analysts. Shares are trading for $8.90, and their average price target of $19.33 suggests the stock has a strong 12-month upside of 118% ahead of it. (See IAS stock forecast 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.
