With a portion of 2024 now behind us, it’s evident that the market momentum from last year persists, with the S&P 500 boasting an 8.5% increase thus far. Interestingly, the fervor surrounding the ‘Magnificent 7’ mega-cap tech companies seems to have eased, offering investors an opportunity to diversify their portfolios without sacrificing returns.
Madison Faller, global investment strategist at JPMorgan, offers insight into this development: “We believe the trajectory for markets remains upward. While big tech may continue its ascent, we anticipate other sectors of the market to also participate… Sectors like consumer-linked names, healthcare, and small to mid-cap companies are poised to join the rally.”
Faller adds, “Last year, the Magnificent 7 accounted for 60% of the S&P 500’s total return of 26%, with the remaining 493 companies contributing just 40%. This year, the tables have turned, with ‘everything else’ now driving nearly 60% of the S&P’s return.”
Following this analysis, JPMorgan analysts have pinpointed two small-cap stocks with the potential for significant gains, potentially soaring up to 140% in the near term. These stocks have not only captured the attention of JPMorgan but also garnered ‘Strong Buy’ ratings from the analyst consensus, according to TipRanks database.
Annexon Biosciences (ANNX)
First on the radar is Annexon Biosciences, a clinical-stage biopharmaceutical firm focused on pioneering treatments for complement pathway-mediated disorders affecting the brain, body, and eye. The company employs a unique approach targeting C1q to intercept all inflammatory aspects of the complement pathway before activation.
Annexon’s flagship program, ANX005, is designed to address Guillain-Barré syndrome (GBS), an autoimmune disorder causing sudden muscle weakness, potentially life-threatening in severe cases. ANX005 has garnered Fast Track and Orphan Drug designations from the FDA, with Phase 3 pivotal clinical trial results expected in Q2 of this year, along with the submission of a Biologics License Application (BLA) in the second half of 2024.
Additionally, Annexon’s ANX007 program targets geographic atrophy, a form of dry age-related macular degeneration. The company plans to initiate Phase 3 trials for ANX007 during mid-2024 and the second half of the year.
Anupam Rama, a 5-star biotech expert at JPMorgan, expresses confidence in Annexon, particularly citing the potential success of the ANX005 pivotal phase 3 trial in GBS. Rama’s bullish stance is reflected in an ‘Overweight’ rating and an $11 price target, indicating a potential 140% gain for the stock this year.
The consensus among analysts echoes this optimism, with a unanimous ‘Strong Buy’ rating and an average price target of $14.80, suggesting a remarkable 222% upside from the current share price.
EverQuote (EVER)
Moving on, EverQuote, an online insurance marketplace, connects insurance buyers with agents across various insurance sectors. Leveraging digital technology and data analytics, EverQuote simplifies the insurance market, making it more accessible, affordable, and personalized for consumers.
Founded in 2011, EverQuote has witnessed a 49% surge in its stock year-to-date, reflecting the increasing adoption of online and digital platforms in the insurance industry.
In its latest reported quarter, EverQuote exceeded revenue expectations, recording $55.7 million, with a narrower GAAP EPS loss compared to the prior-year quarter.
Cory Carpenter, an analyst at JPMorgan, sees EverQuote positioned for sustained growth, anticipating strong results driven by an improved auto carrier spend and structural enhancements made during downturns. Carpenter maintains an ‘Overweight’ rating on EVER stock, with a $25 price target, suggesting a 37% upside potential. PXC PXC PXC PXC PXC PXC PXC PXC
Consistent with Carpenter’s outlook, the consensus rating for EVER shares stands at ‘Strong Buy,’ based on 7 recent analyst reviews, with an average price target of $24.33, implying a 33% gain over the next year.
In conclusion, JPMorgan’s bullish forecasts for Annexon Biosciences and EverQuote reflect their strong potential for significant gains, attracting attention from both analysts and investors alike.
