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These 2 Penny Stocks Could See Outsized Gains, Says Oppenheimer

Lines drawn in the sand in Washington D.C. are holding the next stimulus package hostage, but what does this mean for Wall Street? Despite the stalemate on Capitol Hill, the S&P 500 has rallied 9.5% from a recent low on September 23 on the back of strong economic data.Against this backdrop, investors and economists are starting to wonder if the better-than-expected recent economic data suggests that earlier stimulus packages will be enough to support the economy as we move towards a post-COVID world.Oppenheimer’s Chief Investment Strategist John Stoltzfus points out that “for all the elevation of uncertainty that has come to pass since the start of September,” the U.S. and international markets have been “on the mend and even rallying much to the consternation of bears, skeptics, the perennially nervous and even some denizens of the DC Beltway.” What’s more, as stocks have moved higher, so has the 10-year bond yield.So, what has worked “magic” on the markets? Stoltzfus highlights a “mixed bag of factors” including Q3 earnings season which kicks off this week with the big banks, economic data that has countered recent economic slowing, interest rates that remain near historical lows, as well as “a sense that the outcome of the election will not likely result in an extended period of uncertainty.” Stoltzfus also believes the markets view COVID-19 as more of a detour from “the broader forces at work propelling stocks in the U.S. equity market.”With this in mind, Oppenheimer analysts have locked in on what they argue are exciting opportunities. These are names that won’t break the bank, and boast colossal growth prospects for the twelve months ahead, namely penny stocks.These tickers going for less than $5 apiece are tricky, so some due diligence is necessary. Using TipRank’s database, we got all of the details, to see why they are so compelling even with the risk involved.    Outlook Therapeutics (OTLK)First up we have Outlook Therapeutics, which is focused on developing and commercializing Lytenava, a complex monoclonal antibody, for various ophthalmic indications. Following a recent data readout, Oppenheimer thinks its $0.77 share price presents an attractive entry point.OTLK released top-line data from the NORSE-1 study of Lytenava versus Genentech and Roche’s Lucentis in wet age-related macular degeneration (AMD), a condition that can cause vision loss. In the group receiving OTLK’s therapy, 2 out of 25 (8%) patients reached the primary endpoint (gain of at least 15 letters on best visual acuity assessment), and the group receiving Lucentis had 5 out of 23 (22%) achieve the primary endpoint.Weighing in on this result for Oppenheimer, analyst Leland Gershell points out that even though this was a pivotal trial, it was really more of a clinical experience study to generate use data. In addition, while more Lucentis patients reached the primary endpoint, the analyst mentions that the comparator arm included about twice as many treatment-naïve and/or worse baseline vision patients, which favored Lucentis.The company stated that over 15 letter improvements at month 11 were “equivocal among treatment naïve subjects,” and trended better for Lytenava among those with baseline visual acuity of less than 67 letters, versus 44% on Lucentis.Gershell added, “We believe the results support Lytenava’s prospects in the ongoing U.S. NORSE-2 trial in wet AMD, which is well-powered to show efficacy superiority to Lucentis.” Along with the sufficient sample size for statistical powering, NORSE-2 will stratify according to certain baseline characteristics, exclude patients with better than 20/50 vision and enroll only treatment-naïve patients. As Lytenava is positioned to play a meaningful role in the multi-billion dollar retinal disease market, a licensing agreement or partnership isn’t out of the question, in Gershell’s opinion. To this end, he recommends investors snap up shares before the NORSE-2 readout.Given all of the above, Gershell rates OTLK an Outperform (i.e. Buy) along with an $8 price target. Investors could be pocketing a gain of 947%, should this target be met in the twelve months ahead. (To watch Gershell’s track record, click here)Turning now to the rest of the Street, 3 Buys and no Holds or Sells have been published in the last three months. Therefore, OLTK has a Strong Buy consensus rating. With the average price target clocking in at $6.33, the upside potential lands at 729%. (See OLTK stock analysis on TipRanks)Organogenesis Holdings (ORGO)As one of the top regenerative medicine companies, Organogenesis Holdings focuses on empowering healing through the development of products…

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