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Goldman Sachs Bets on These 3 Stocks; Sees Over 50% Upside Potential

What goes up must come down, as we all know. This fact of physics is the underlying worry of the stock market, that fuels our suspicions of bubbles. But investment firm Goldman Sachs doesn’t believe we should worry; the firm’s chief global equity strategist Peter Oppenheimer gives several reasons to expect that the market’s current upward trend is real. His key points include the equity risk premium, the real profits realized by the Big Tech giants, and the high savings rate of US households coming out of the COVID pandemic. Taking these points one at a time, Oppenheimer notes that in today’s regime of record-low interest rates, higher-risk stocks offer a premium; that is, their potential returns are far higher than safe bonds, and justify the added risk factor. On the second point, the giants of the tech industry represent a massive concentration of capital and wealth in just a few companies (Facebook, Apple, Amazon, Microsoft, and Google); but these companies built that concentration through strong fundamentals and real profit growth, rather than bubble inflation. And finally, on the point of savings, the decline in overall economic activity during the pandemic period has left US households with some $1.5 trillion in accumulated savings – which can be used for retail stock investing. Taking Oppenheimer’s outlook and turning it into concrete recommendations, the pros at Goldman Sachs are giving three stocks a thumbs up. Specifically, the firm’s analysts see over 50% upside potential in store for each. We’ve looked up these stock calls in the TipRanks database, to find out if Wall Street agrees with Goldman’s take. SpringWorks Therapeutics (SWTX) The first Goldman pick we’re looking at is a clinical-stage biotech firm in the oncology niche. SpringWorks uses a precision medicine approach in its development and commercialization of medical treatments for patient populations suffering from severe cancers and rare diseases. The company has an active pipeline, with programs investigating drug candidates for the treatment of desmoid tumors, plexiform neurofibromas, multiple myeloma, and metastatic solid tumors. The first two programs are the most highly advanced. Nirogacestat, the drug in testing against desmoid tumors, is undergoing Phase 3 study, and has received Orphan Drug Designation and Fast Track Designation from the FDA. The drug candidate operates through two therapeutic mechanisms, and has shown promise against multiple myeloma. Clinical studies of nirogacestat are underway for several additional indications. Mirdametinib, the company next most advanced drug candidate, is undergoing Phase 2b trial as a treatment for inoperable plexiform neurofibromas (NF1-PN). This is a rare cancer of the nervous system, affected the peripheral nerve sheaths and causing serious pain and disfigurement. NF1-PN can affect both children and adults, and mirdametinib is being studied as a treatment for both populations. As with Nirogacestat, the FDA has given Orphan Drug and Fast Track designations to this program. The trial is currently 70% enrolled and early data is described as ‘encouraging.’ A large and active research program will always draw attention from Wall Street’s biotech experts, and Goldman analyst Corinne Jenkins has noted several upcoming catalysts for SprinWorks: “1) DeFi topline data in desmoid tumors (2H21), 2) mirdametinib + lifirafenib combination data (2021), 3) BGB-3245 first-in-human data (2021), 4) DREAMM-5 update in MM (2H21), and 5) detailed ReNeu interim clinical results (2021).” Building from that, the analyst sees the company showing strong return potential. “[We] see upside to the commercial outlook for SWTX’s rare oncology programs driven by extended duration of therapy, but view the clinical results expected this year as well-understood and therefore unlikely to significantly drive stock…