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According to Wells Fargo, these 2 stocks are still attractive despite the declines

Claude Malouxe
29. 4. 2023
7 min read

Buy when there's blood in the streets. It's easier said than done. Many investors after stock price declines are unsure if the stock is still as good as it was before. But according to analysts at Wells Fargo, these 2 stocks are definitely worth it.

Recently, stock markets have been moving in a relatively narrow range, especially the S&P 500 index. Scott Wren of Wells Fargo predicts that the index will remain range bound with the low end around 3,600 and the high end around 4,300. Wren recommends investors focus on large- and mid-cap U.S. stocks, particularly in the energy, health care and technology sectors.

We want to focus on U.S. over international, large- and mid-cap stocks over small-caps, and favor sectors like energy, health care and technology that we believe have the potential to weather the economic storm we may see later this year.

So let's take a look at 2 stocks that have recently taken a liking to the well-known Wells Fargo bank.

Zscaler, Inc. $ZS+0.4%

ZS
$164.74 $0.58 +0.35%

Zscaler is a leading network security technology company. It specializes in providing a Zero Trust Exchange platform that provides secure access to applications and data no matter where users or servers are located. Zscaler's platform enables organizations to easily protect their networks from malware, cyber-attacks and misuse of internal resources.

Zscaler products and services

Zscaler offers a wide range of products and services that focus on various aspects of network security, such as:

  • Zscaler Internet Access (ZIA): an Internet access security service that protects users from cyber threats and enables secure connections to web applications.
  • Zscaler Private Access (ZPA): a service for securing private networks and applications that allows secure access to internal resources without the need for a VPN.
  • Zscaler Digital Experience (ZDX): A tool for monitoring and optimizing the digital experience of users.
  • Zscaler Cloud Security Posture Management (CSPM): A cloud security posture management solution that helps organizations identify and address security risks associated with their cloud environments.

The benefits of Zscaler

  1. Broad range of products and services: Zscaler offers a comprehensive portfolio of products and services that cover various aspects of network security. This helps organizations easily select and implement solutions that best suit their needs.
  2. Easy integration: the Zscaler platform is designed to integrate easily with existing IT systems and infrastructure. This makes it easy to deploy and scale Zscaler solutions across organizations.
  3. Innovation and development: Zscaler is known for its emphasis on innovation and development of new technologies. In recent years, it has seen a year-on-year revenue growth of more than 51%, which is a testament to its success in the market.

The disadvantages of Zscaler

  1. Competition: The cybersecurity market is highly competitive and rapidly changing. Zscaler faces competition from many other companies in the industry that are also struggling to offer innovative and effective solutions.
  2. Dependence on technology trends: Zscaler's success depends on its ability to keep up with ever-changing technology trends and customer needs. This includes investments in research and development, which can be costly and risky.

This company has particularly endeared itself to Wells Fargo analyst Andrew Nowinski, who recently gave reasons for his bullish stance.

We still believe Zscaler has an architectural advantage over its competitors that should drive long-term growth and market. share gains. Despite a slight slowdown in Billings growth last quarter, we believe management has made improvements in its go-to-market strategy and has a strong pipeline. As such, we reiterate ZS as our "Top Pick."

Along with this commentary, Nowinski identified the company as a good buy candidate with a price target of $156, representing annual growth of over 50%.

Intellia Therapeutics $NTLA-4.8%

NTLA
$21.62 -$1.10 -4.82%

Intellia Therapeutics is a biotechnology company focused on editing genes and creating novel therapeutic agents to treat genetic diseases. Intellia uses revolutionary CRISPR-Cas9 technology to enable precise and efficient gene editing in living organisms. The company currently has two clinical-stage drug candidates: NTLA 2001 for the treatment of ATTR amyloidosis and NTLA 2002 for the treatment of hereditary angioedema (HAE).

Intellia Therapeutics products and services

Intellia Therapeutics is focused on the development and commercialization of therapeutic products based on CRISPR-Cas9 technology. Their principal products include:

  • NTLA 2001: A drug candidate for the treatment of ATTRamyloidosis, a rare genetic disease characterized by the accumulation of amyloid proteins in various organs and tissues. NTLA 2001 has the potential to provide a permanent treatment for patients with ATTR amyloidosis through a single intravenous administration.
  • NTLA 2002: a drug candidate for the treatment of hereditary angioedema (HAE), a rare genetic disease that causes recurrent episodes of swelling in various parts of the body. NTLA 2002 is aimed at reducing the frequency and severity of swelling in patients with HAE.

In addition to these lead drug candidates, Intellia has other therapeutic programs in various stages of development that target the treatment of other genetic diseases and oncology indications.

Benefits of Intellia Therapeutics

  1. Pioneering Technology: Intellia Therapeutics is leveraging its revolutionary CRISPR-Cas9 technology, which has the potential to provide breakthrough therapeutic options for the treatment of a number of genetic diseases.
  2. Strong development pipeline: The Company currently has two clinical-stage drug candidates and a number of other therapeutic programs in various stages of development. This suggests that Intellia has the potential to bring more therapeutic products to market in the future.
  3. Collaborations with leading companies: Intellia has collaborations with several leading companies in the biotechnology and pharmaceutical industries, which can help accelerate the development and commercialization of its products.

Disadvantages of Intellia Therapeutics

  1. Regulatory Risk: The development and commercialization of new pharmaceuticals is an uncertain and costly process that involves a number of regulatory hurdles. There is a risk that some of Intellia's products may not achieve required regulatory approvals or that their development may be delayed or halted.
  2. Competition: The market for gene editing-based therapies is rapidly growing and highly competitive. Intellia Therapeutics faces competition from many other companies in the industry that are also seeking to develop and commercialize innovative gene therapies.
  3. Financial risks: the development of new therapeutic products is an expensive and time-consuming process, which means that Intellia Therapeutics must ensure sufficient funding for its research and development activities. Intellia shares are down 50% from last August's 52-week high, which may indicate financial uncertainty in the short term.

This stock, for a change, appeals to Wells Fargo analyst Yanan Zhu, who is quite bullish on this stock. This is evidenced by his commentary.

We view the IND clearance as a key step forward for the field and for NTLA's value inflection. We would note that while NTLA demonstrated best-case scenario clinical data last year, the stock was depressed due to concerns over whether the FDA would allow in vivo adjustments to proceed (which we thought should not be an issue due to clear regulatory precedents. ) With the first IND now approved, we see significant room for value creation as additional data from the TTR and HAE studies are reported.

Along with his commentary, he set a price target of $100, reflecting upside potential of over 100%.

Conclusion

So today we took a look at 2 "Top Pics" from Wells Fargo analysts. It's clear that analytically in the current situation they are not afraid to wade into the waters of smaller and even riskier companies. These companies can deliver nice profits for investors, but at the same time there are some pretty big and significant risks. It is therefore up to each individual to consider whether the risk/reward ratio is acceptable to them.

WARNING: I am not a financial advisor, and this material does not serve as a financial or investment recommendation. The content of this material is purely informational.


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