Immunomedics Inc. (NASDAQ:IMMU), Lattice Semiconductor Inc. (NASDAQ:LSCC) and Lionbridge Technologies Inc. (NASDAQ:LIOX) are three top analyst stock picks trading under $10 per share. Here, we’ll take a look at the factors underlying these analyst opinions, as well as how to use options to leverage the trades and generate exceptional returns on investment.
Immunomedics Could Double in Price
Immunomedics, a biopharmaceutical company focused on monoclonal antibody based treatments for cancer and other serious diseases, was initiated with a Buy rating and $8.00 per share price target by Summer Street. At a significant 96% premium to the current market price, the analyst’s price target reflects a very bullish outlook on the company.
With profits growing from partner payments, the company is well-positioned to continue developing its pipeline. Investors looking to capitalize on this opportunity may want to look at the company’s January 2013 LEAPS call options. While the options aren’t experiencing a large amount of volume, the last trades on the 5.00 calls occurred at $1.10 per contract.
Lattice Could be a Takeover Target
Lattice Semiconductor Inc. (LSCC), a developer of logic products and related software for semiconductor companies and other customers, was reinitiated with a $9.00 per share price target by Pacific Crest. At a significant 58% premium to the current market price, the analyst’s price target reflects a very bullish outlook on the company’s future.
While the company is a distant third in the programmable device market, some investors believe it could be a buyout target for a larger company to diversify. Investors looking to capitalize on this potential, as well as its underlying fundamentals, may want to consider its in-the-money 5.00 March 2012 call options priced at $1.50 per contract. This position would profit some 166% with a move to $9.00 per share.
Lionbridge Continues to Outperform
Lionbridge Technologies Inc. (LIOX), a provider of language, development and testing services for technology applications and web content, was initiated with a Buy Rating and $5.00 per share price target by Wunderlich. At a significant 67% premium to the current market price, the analyst’s price target reflects a very bullish stance on the company’s future outlook.
Last quarter, the company blew past analyst estimates with 7 cents per share of earnings on revenues of $113.2 million. However, some analysts caution that the environment remains uncertain. Investors interested in capitalizing on this opportunity with less risk may want to consider a pairs trade. By purchasing LIOX equity and put options against a larger competitor, the risk of a downturn is hedged.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.