J.P. Morgan Says the Stock Market Is Poised for More Upside; Here Are 2 Stocks the Banking Giant Likes

The big question investors are asking right now is: Where will inflation go? And the related follow-up question for everyone is: How far will the Fed hike rates in response? The possible answers run the gamut of possibilities, from President Biden's cheery talk of "zero percent inflation" to the market bears predicting a full-blown economic crisis.
Among the bulls is JPMorgan's chief asset management strategist, David Kelly. He is unconvinced by the naysayers and sees the recent fall in inflation as a sign the worst is behind us. While current conditions are still challenging, Kelly believes the stock market can and will show additional strength going forward. In his words, "I would be fully invested in stocks at this point because I think stocks can go higher here."
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So let's follow JPM a little further down this path. The banking giant's equity analysts have picked two stocks they believe are poised to move forward -- in the region of 40% or more. In fact, JPM experts aren't the only ones praising these stocks. They are classified as Strong Buys by analysts at The Street, according to the TipRanks platform. Let's take a closer look.
BeiGene (BGNE)
JPM's top pick is BeiGene, a clinical-stage biopharmaceutical company that it says has "a broad and deep pipeline" that is taking a shotgun approach to oncology. The company is developing an enormous number of drug candidates, more than 50, both internally and collaboratively, to address the treatment needs of approximately 80% of malignancies. A pipeline of this size gives the company a competitive edge over its competitors.
BeiGene is a truly international biotech company, operating in Asia, Europe and the Americas, with administrative offices in Beijing, China, Cambridge, Massachusetts and Basel, Switzerland. From these offices, the Company oversees its development activities and commercialization activities for its line of approved commercial-stage products.
The leading approved products are zanubrutinib, marketed as Brukinsa, pamiparib, marketed as Partruvix, and tislelizumab, marketed under its own name. As a group, these drugs are approved in multiple international jurisdictions for the treatment of various hematologic cancers and solid tumors. BeiGene has been actively marketing them for several years, generating total revenues of $304.5 million in Q2'22. That figure included US$128.7 million from Brukinsa and US$104.9 million in sales of tislelizumab in China. Total company revenue, including collaboration fees, was $341.6 million compared to $150 million in the same quarter last year.
Analyst Xiling Chen, who covers JPMorgan stock, believes BGNE represents a compelling risk return. Kumar rates the stock as Overweight (i.e., buy), along with a price target of $296, which implies upside potential of 50% in one year.
Chen reiterates his bullish stance, writing, "We view BeiGene stock as undervalued given the quality of the assets/growth and highlight the stock as one of our top picks in this sector... BeiGene has evolved into a fully integrated biopharmaceutical company with Best-in is developing world-class clinical development capabilities, one of the largest and best commercial oncology platforms in China, and unmatched partnering capabilities with global biopharmaceutical companies. We expect the company's 16 commercial assets and broad pipeline to drive very attractive, diversified long-term growth. While staying slightly below consensus on long-term sales, we see additional pipeline traction as a boon to our estimates..."
A total of 6 Wall Street analysts have commented on this biotech giant, giving 5 buy ratings versus 1 hold for a consensus rating of Strong Buy. The shares are valued at $192.77 and their average price target of $253.76 indicates upside potential of ~29% in the coming months. (See BGNE Stock Prediction on TipRanks)
Xenon Drugs (XENE)
The second stock we're looking at is Xenon, another clinical-stage biopharmaceutical company. Xenon is working on new therapeutic compounds in the field of neurology and is searching for novel drugs to treat neurological diseases with high unmet medical needs. The company is particularly focused on the treatment of epilepsy.
Xenon has two lead drug candidates in this area, XEN496 and XEN1101, in Phase 3 and Phase 2 studies, respectively. XEN496 is a Kv7 potassium channel opener and is being investigated in a rare pediatric form of epileptic seizures. The Company expects to complete the Phase 3 EPIK study of XEN496 during 2023.
However, XEN1101 is the company's flagship drug candidate. It is currently undergoing multiple Phase 2 trials for focal seizures (FOS), primary generalized tonic-clonic seizures (PGTCS), and major depression. The Phase 2b X-TOLE study in FOS is expected to be completed this year, and the Company has two identical Phase 3 studies, X-TOLE2 and X-TOLE3, in the pipeline that will be conducted upon completion of the current study must. The phase 3 studies are running in parallel and will enroll up to 360 patients.
Xenon is also planning the Phase 3 X-ACKT study to continue its study of the efficacy of XEN1101 against PGTCS. This study will be conducted concurrently with the X-TOLE studies.
Finally, Xenon has the phase 2 X-NOVA study underway to evaluate XEN1101 for major depressive disorders. Top-line results from this X-NOVA study, which enrolled 150 patients, are expected in 2023.
JPM analyst Tessa Romero sees XEN1101 as a key driver in this stock and explains a clear reason: "Mainly supported by convincing X-TOLE data from phase 2b as well as positive feedback from physicians, we see XEN1101 as a high probability of success as an add-on treatment in the Lead indication focal seizures (FOS). At the same time, we also see the potential for XEN1101 to work in both partial and/or generalized seizure patients and are forecasting ~$1 billion in peak sales in the US alone in the combined epilepsy indications (~$700 million of that FOS). where our estimates may prove conservative."
"We believe there is an opportunity for XENE shares at current levels, which demonstrate the potential of XEN1101 to expand into additional indications with high unmet needs beyond FOS where there are compelling new reasons," the analyst added.
Romero rates XENE shares as Overweight (i.e., Buy), and their $55 price target implies a 46% upside move by the end of next year. (To see Romero's track record, click here)
Wall Street is clearly bullish on this biopharmaceutical as all 8 of the most recent analyst ratings are positive - for a unanimous Strong Buy consensus rating. The stock trades for $37.57 and its average price target of $51 suggests upside potential of ~36% in one year. (See Xenon Stock Prediction on TipRanks)
For great stock trading ideas at attractive valuations, visit TipRanks' Best Stocks to Buy, a newly launched tool that brings together all of TipRanks' stock insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is for informational purposes only. It is very important that you do your own analysis before making any investment.
BGNE
+1.64%
XENE
-0.84%

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