Source: Zhitong Finance

In the investment world, the art of “stock selection” is critical to investment portfolios. Successful investors often rely on high-quality stock tokens to implement investment plans to obtain rich returns. So when Wall Street's expert analysts list a stock as their “best choice,” it's a very important sign that this stock has huge potential, and investors should keep a close eye on this.

The Zhitong Finance App has observed that analysts at Wall Street banking giant J.P. Morgan Chase recently listed the following two stocks as “best choices” targets:$Targa Resources (TRGP.US)$versus$BeiGene (BGNE.US)$.

Targa Resources Corporation

Targa Resources is a company in the midstream of the energy industry that operates between wellheads and end customers. Midstream companies in the energy industry often control pipeline networks and energy infrastructure to get hydrocarbon products where they are needed. Targa is one of North America's largest independent midstream operators, focusing on natural gas and liquefied natural gas transportation; its asset network is concentrated in the affluent production areas of Texas, New Mexico, Oklahoma, and the Gulf Coast of Louisiana.

Targa is relatively unaffected by gas and crude oil costs in the commodity market, as the company transports products through its network in a “toll road” model; that is, producers pay a certain amount of capital through contracts. This model enabled Targa to achieve profit and cash flow growth in the recently announced fourth quarter of 2022, despite a year-over-year decline in revenue.

Specifically, Targa reported revenue of $4.55 billion, down 16% from $5.44 billion in the fourth quarter of 2021. The good news is that the company's operating profit increased from a loss of $335.4 million to a profit of $317.9 million. The increase in operating profit was mainly due to a strong increase in liquefied natural gas transportation volume, which increased by 16% from 432,800 b/day in the same period last year to 502,300 b/d during the reporting period.

Also of interest to investors, Targa reports that $542 million of total capital was returned to shareholders in 2022 through regular dividends and share buybacks.

In summary, all of this information caught the attention of J.P. Morgan analyst Jeremy Tonet, who wrote: “We still think Targa's strengths and concessions in the Permian Basin created favorable risk/reward value. Targa has a complete Permian drill-to-dock NGL value chain, and we think Targa has a differentiated growth story compared to all C-Corp peers... Considering the integration of the Permian wellhead export value chain, NGL operating leverage, direct commodity price increases, deleveraged visibility, and increased shareholder returns, we reaffirm that Targa is the best target choice.”

J.P. Morgan analyst Tonet not only gave an optimistic outlook for this stock, but also gave the stock an “increase in holdings” rating and set its target price at $119, which means that the one-year upward potential is as high as 76%. J.P. Morgan is highly optimistic about this stock, but the agency's views are far from an example. Targa stock recently received unanimous affirmative reviews from 11 analysts, who gave the stock a consensus rating of “strongly bought.” The stock's price as of the previous closing date was $67.52, and the average target price was $100. The change indicates that there is room for 48% growth over the next year. As a small “bonus,” the company regularly pays dividends and currently has an annual yield of 2%.

As of press time, the stock is up nearly 2% to $68.58.

BeiGene State

BeiGene is also the target of J.P. Morgan Chase's “Best Choice”, a biopharmaceutical company that is in the clinical and commercialization stages at the same time. BeiGene's product line is both broad and deep, which has enabled the company to “achieve its goals” many times when developing new drugs in the field of oncology. BeiGene is working within the company and with partners to carry out these efforts; the company currently has more than 60 clinical projects underway, targeting around 80% of cancers, which gives it a huge advantage of scale compared to its peers.

While the company's size and scope are impressive, for investors, the key factor in this stock is that it has successfully brought new drugs into the market. BeiGene has a number of cancer treatments approved for use, and has been working to increase sales.

The approved drugs were tislelizumab (tislelizumab) named after itself, zanubrutinib (zanubrutinib) named after Brukinsa, and Pamiparib (Pamiparib) named after Partruvix; BeiGene refers to the first two products as “cornerstone products.” “These drugs have all been approved in multiple jurisdictions to treat a variety of parenchymal solid tumors and hematologic tumors.

Judging from the data, BeiGene received $102.2 million in product revenue from tislelizumab in the fourth quarter of 2022, and $564.7 million in revenue from the drug throughout 2022. These results are up 72% and 97%, respectively, from 2022. The second “cornerstone” product, Brukinsa, had fourth-quarter revenue of 176.1 million US dollars and annual revenue of 564.7 million US dollars; these two figures represent annual growth rates of 101% and 159%, respectively.

BeiGene's total revenue in 2022 was $1.4 billion, compared to $1.2 billion in 2021. Total revenue for 2022 includes $1.3 billion in product revenue, up 97.9% from the previous year.

When studying the stock, J.P. Morgan analyst Xiling Chen focused on the company's successful sales performance and sales prospects. “We expect sales momentum in the US market to accelerate further in 2023, driven by the listing of CLL/SLL (the largest indicator in the NHL). We have moderately raised Brukinsa's immediate and long-term sales expectations in the US. We currently expect sales of this product to reach 1 billion US dollars this year, and sales will reach 4 billion US dollars in 2032. We think there is additional upside associated with the BeiGene team's commercial execution and additional expansion of indications,” Xiling Chen wrote.

The analyst concluded, “We continue to target Baicenzhou as our current 'best choice', mainly because of the strong momentum of Brukinsa CLL/SLL in the US, and sales for the next few quarters may exceed expectations.”

J.P. Morgan analyst Xiling Chen gave the stock an “overweight” rating, while the target price of $297 indicates the stock's potential one-year upside of about 35%. According to TipRanks data, BeiGene was recently covered by 8 analysts. The consensus rating was “Strong Buy”, and the average target stock price was 300.51 US dollars.

As of press time, the stock rose more than 1% to $222.46.

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