4 Hot Analyst Reads For Monday, July 2nd

A synopsis of recent analyst activity that could buoy these small cap biotech stocks in the trading market today

A woman's guess is much more accurate than a man's certainty.” ― Rudyard Kipling, Plain Tales from the Hills

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Here are four small cap stocks seeing notable analyst commentary just as we open up trading here on the first trading day for the second half of 2018.

Jefferies is out with a bullish call on animal health and services concern PetIQ (PETQ) as they reiterate their Buy rating and raise their price target to $32 price with the following color

“We remain bullish on PETQ and lift our PT to $32 (+21% TSR) following a WMT store visit to a new VetIQ Petcare clinic in Lehighton, PA. With some ~50%/85% of PETQ’s profit growth levered to its services roll-out in FY18-20/21-23, resp., execution and proof of concept are critical to the co.’s LT success. PETQ offers attractive 15%/25% sales/EPS growth and trades at 15.5x EV/EBITDA (vs. 21.5x for high growth retailers), making it our top small cap growth idea. We remain bullish on PETQ’s outlook and lift our PT to $32 (+21% TSR) post a WMT store visit to one of the new VetIQ Petcare clinics in Lehighton, PA. Following PETQ’s 1Q acquisition of vip.petcare and announced plans to build 1,000 new vet clinics over the next five years, the VetIQ Petcare rollout takes on critical importance for the stock. That is, we expect services to drive some ~45%/~50% of sales/EBITDA growth in in FY21-23.”

The stock has had a nice move since we gave it a 'thumbs up' in a recent 'deep dive'.

Cantor Fitzgerald is out this morning with a new Outperform rating and $15 price target on Melinta Therapeutics (MLNT). Cantor's analyst provide the following commentary to support his positive view on the company and stock

"We are initiating coverage of Melinta’s stock with an Overweight rating and $15 PT. Upward earnings revisions and multiple expansion will drive the shares higher, in our view. We think a greater appreciation for the company’s four commercial, antibiotic drugs (Baxdela, and its growing pipeline (new drugs, international expansion, additional indications) will increase earnings estimates to levels not yet reflected in consensus expectations. Also, MLNT is considering adjacent opportunities, which means it could become a diversified hospital company. This should improve its trading multiple, in our view.”

Late Friday, Piper Jaffray raised its price target on Arrowhead Research (ARWR) to $17 from $11 previously and reissued their Overweight rating on the stock. Jaffray's analyst is 'encouraged' by preliminary Phase 1 data on ARO-AAT and believes that a robust Phase 2 study in AAT liver disease patients could begin before the end of 2018.

The stock has had a nice little move recently as its pipeline based on RNA interference evolves.

Finally, another analyst at Cantor Fitzgerald is bullish on **Marinus (MRNS)**and moved to Overweight on the equity this weekend with a $19 price target. Here are the notes from that call

“We are initiating coverage on Overweight rating and 12-month price target of $19. Marinus is developing ganaxolone, a positive allosteric modulator of GABA A receptor, for the treatment of neurological diseases, including CDKL5 deficiency disorder (CDD), postpartum depression (PPD), and refractory status epilepticus (RSE). Based on the encouraging data in a Phase 2 trial for CDD, large market potential opportunities, strong safety profile observed in 1,600 patients, and undervaluation versus peers, we believe Marinus offers a compelling risk-reward profile ahead of upcoming catalysts.”

And those are four small cap concerns seeing recent analyst activity before trading begins Monday. Happy Hunting.

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