Whatever your thoughts on 2021, it has to be said that it has been a banner year for IPOs. In the United States alone, we are on track to see approximately 1,000 companies join the ranks of publicly traded companies. That’s a plurality of the 2,850 or so companies that have gone public around the world – and we still have a full month left. By mid-November, the new public companies had raised a global total of more than $ 600 billion.
This brings us to Morgan Stanley. Stock analysts at the banking giant searched for stocks that were ready to win, and they exploited two new stocks in the public markets that are likely to jump 100% or more in the coming months. Not to mention that the two got a consensus “Strong Buy” rating from the rest of the street. Let’s take a closer look.
Rent the track (TO RENT)
First up is an e-commerce company with an interesting twist. Rent the Runway makes contemporary fashion accessible to everyone, through clothing rentals of 4 to 8 days. Customers can choose a one-time rental or purchase a subscription service, and clothing is available for special events, daily wear, kids, and even sports. Accessories, such as jewelry and handbags, are also available, and rents include maintenance and dry cleaning of clothes.
It would all spark interest, but Rent the Runway also has another claim to fame, as the CEO and all of the company’s top executives are women. Founder Jennifer Hyman built the company on the idea that all women should have access to an unlimited designer wardrobe. His idea caught on and his business now has over 2.5 million lifetime customers, 88% of which were acquired organically.
This company hosted its IPO in October this year, launching the RENT ticker on Wall Street on October 27. The IPO saw 17 million shares on the market, at $ 21 each. It was above the expected price of $ 18 to $ 21. Overall, RENT brought in $ 357 million from the IPO.
Morgan Stanley Analyst Lauren Schenk reviews RENT and takes a bullish stance, writing: “We see RENT’s innovative and market-leading fashion clothing rental subscription business in the first rounds with a clear path to profitability: RENT is the biggest women’s fashion clothing rental company, with a significantly larger share than all of the other market players combined. We view the fashion rental space as a win-win / everything market with RENT building a deep competitive divide through its large assortment of inventory, strong brand relationships, complex reverse logistics network and business models. unique inventory.
Unsurprisingly, Schenk rates RENT an overweight (i.e. buy) and sets a price target of $ 28 which implies a substantial upside margin of 125% over the next 12 months. (To look at Schenk’s track record, Click here)
Wall Street broadly agrees with Morgan Stanley’s take. This new stock benefits from a very unanimous purchase consensus rating, based on 9 analyst reviews. RENT shares are trading at $ 12.44, and their average target of $ 22.78 suggests upside potential of 83% year on year. (See the analysis of RENT shares on TipRanks)
IO Biotech (IOBT)
The next company we’ll be looking at, IO Biotech, is a clinical-stage biopharmacy, working on a new approach to cancer vaccines. The company’s proprietary T-win platform is designed to develop novel immunotherapies that stimulate the body’s immune system to suppress tumors. IO Biotech has an active research pipeline, with its lead drug candidate, IO102-IO103, being investigated in several clinical trials as a treatment for various solid tumors.
The main line of research is a phase 2 study of IO102-IO103 in the treatment of advanced melanoma. The drug candidate received a Breakthrough Therapy (BTD) designation from the FDA a year ago and has since demonstrated clinically significant results on the melanoma track. The results of the ongoing phase 2 study are expected in the second half of next year. The company will also shortly launch a Phase 3 trial evaluating IO102-103 plus pembrolizumab for the treatment of metastatic (advanced) melanoma with interim data expected by the end of 2023.
The active research pipeline was a key attractor for investors during the IPO, which took place in November. The IOBT ticker began trading on November 5 and the offer was fully subscribed. The company has put 7.15 million shares on the market at $ 14 each; at the closing of the offer on november 9, 8,222,500 shares had been sold, including the options of the underwriters. The IPO raised a total of $ 115.1 million in gross proceeds.
Analyst Matthew Harrison, in his coverage for Morgan Stanley, points out that the company’s new development platform is a major focus of interest for investors.
“Immunotherapy has become the standard of care and the backbone of combination therapy for many cancers. However, due to the immunosuppressive tumor microenvironment, immunotherapy only works in certain patients and in certain types of cancer (eg, PD-1 positive versus PD-1 negative). IO Biotech aims to meet the challenges of current immunotherapies through its T-win platform, which selects targets and epitopes within TME designed to simultaneously activate the body’s immune cells while eliminating cells with immunosuppressive properties ” , wrote Harrison.
“Overall, based on promising clinical data and extensive pipeline expansion opportunities, we believe IO Biotech is well positioned,” the analyst summed up.
To that end, Harrison rates the IOBT overweight (i.e. buy) and sets a price target of $ 21 indicating confidence in a robust 178% upside potential. (To look at Harrison’s background, Click here)
This is another new stock with a very unanimous buy rating; all three recent reviews are positive. The current stock price is $ 7.56 and its average price target of $ 20.50 implies an increase of about 171% from that level. (See the analysis of IOBT shares on TipRanks)
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Warning: The opinions expressed in this article are solely those of the analysts presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.