The earnings season is in full swing, and tech titans such as Meta Platforms (META), Microsoft (MSFT), and others have reported strong quarterly results, capturing investors' attention. However, a few other under-the-radar stocks are also rapidly growing and have excellent long-term prospects.
Wall Street has high expectations for two such companies: Ocugen (OCGN), a small-cap clinical-stage biopharmaceutical company, and Monday.com (MNDY), a software company. Let’s find out why.
#1. Ocugen
Ocugen (OCGN) is a clinical-stage biopharmaceutical company developing gene therapies to treat rare eye diseases and advancing vaccines for infectious diseases. The company's diverse pipeline consists of its flagship COVID-19 vaccine, Covaxin, which was created in partnership with the Indian multinational biotechnology company Bharat Biotech, as well as ophthalmology products.
Valued at $287 million, this small-cap stock has soared 73.9% year-to-date, outpacing the S&P 500 Index's ($SPX) gain of 24.7%.
The company's pipeline includes other products that are developing quickly, even though the COVID-19 vaccine doesn't make as much money as it used to in the post-pandemic market.
Ocugen’s ophthalmology pipeline includes OCU400, a gene therapy candidate that targets several gene mutations that cause blindness. The company stated in the third quarter earnings release that OCU400 is undergoing a Phase 3 clinical trial for which enrollment is expected to be completed in the first half of 2025.
Another candidate, OCU410, which focuses on dry age-related macular degeneration, a major cause of blindness in older adults, is in Phase 2 trials now.
Recently, the company raised $30 million in debt financing from Avenue Venture Opportunities Fund. Prior to this, Ocugen has raised $35 million in equity financing.
Management believes the cash raised with the recent equity and debt financing will fund their pipeline requirements until the first quarter of 2026. Its cash and restricted cash totaled $39 million at the end of the quarter.
Ocugen’s focus on rare eye diseases provides an opportunity to address unmet medical needs. With growing interest in treatments for genetic disorders, the global gene therapy market is projected to grow significantly.
All four analysts that cover Ocugen stock rate it as a “strong buy.” Its mean target price is $6.25, which implies an upside potential of 525% from current levels. Plus, the stock has a high target price of $8, which means the stock could rally by 700% or so.
Even though the short-term gains appear unachievable, it is common for clinical-stage biotech stocks to soar to record-breaking levels, as positive trial results or regulatory approvals can result in sharp price increases. However, any kind of setbacks during trials or the approval process could also lead to significant declines.
As a penny stock, Ocugen stock represents a high-risk, high-reward opportunity in the biotech sector.
#2. monday.com
Israel-based monday.com (MNDY) is a software-as-a-service (SaaS) company. It provides a flexible Work Operating System (Work OS) that allows teams and organizations to manage a variety of projects and workflows in a customized manner.
Valued at $12.9 billion, Monday.com stock has gained 43.2% year-to-date, outperforming compared to the broader market's gain.
The company has maintained strong revenue growth, led by an expanding user base, upselling within existing accounts, and geographic expansion. Monday.com reported a strong third quarter, with revenue up 33% year on year to $251 million, surpassing consensus estimates.
MNDY's subscription-based revenue model provides revenue predictability and stability. Monday.com's annual recurring revenue (ARR), a positive indicator for investors, stood at $1 billion during the quarter. Furthermore, the net dollar retention rate (NDR), which measures how well a company retains its existing customers, stood at 111% in the quarter.
Despite high R&D expenses, which are typical for SaaS companies focused on growth, Monday.com has improved its profitability. Adjusted net income of $0.85 per diluted share rose by 32.8% year on year, beating analysts’ estimates.
The company continues to make significant investments in product development, with recent initiatives focusing on integrating artificial intelligence (AI) and machine learning. A strong free cash flow balance of $82.4 million will help fund these expansion plans.
Management forecasts 32% revenue growth for the full year 2024, in line with consensus estimates. In 2024, analysts also predict a 73.6% growth in earnings. Revenue is expected to grow by 26.8% in 2025, alongside a 16% increase in earnings. MNDY stock is trading at 72 times forward 2025 earnings and 10 times forward sales.
Despite its growth potential, the stock's valuation remains relatively high when compared to traditional tech companies, owing primarily to strong revenue growth and its long-term prospects in the project management software space.
Overall, on Wall Street, MNDY stock is a “strong buy.” Out of the 21 analysts covering the stock, 15 rate it a “strong buy,” two suggest a “moderate buy,” and four rate it a “hold.” The average target price of $323.75 is 20.4% above current levels. The high price estimate of $355 suggests an upside potential of 32% over the next 12 months.
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