Zoomed

Clinical-stage biotech Nektar Therapeutics (NKTR 15.06%) had some encouraging news to report from the lab about one of its investigational medicines on Thursday. As often happens in such circumstances, investors flocked to the stock, and it closed the trading session a bit more than 15% higher. With that rise, it crushed the 0.5% advance of the bellwether S&P 500 index.

Skin in the game

That morning, Nektar published new data from a phase 2b study of rezpegaldesleukin, which targets moderate to severe atopic dermatitis, a skin disorder.

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The healthcare company said that a high dose of the drug achieved statistical significance on its primary endpoint, improvement in the eczema area and severity index versus a placebo over the course of 16 weeks of treatment. It also performed well in key secondary endpoints measuring a reduction of the disorder.

More encouragingly, Nektar found that participants who kept taking the treatment experienced even more profound effects. The biotech added that rezpegaldesleukin was generally well tolerated by the study’s participants.

In addition to atopic dermatitis, the drug is currently being developed by Nektar for the treatment of severe alopecia areata, a disease that can result in hair loss. The next readout from clincal testing for that indication is expected in December by the company.

A new kind of treatment

In its press release on the atopic dermatitis trial’s results, Nektar quoted its chief research and development officer Jonathan Zalevsky as saying that those results “demonstrate the potential of this new biology and the promise of Tregs [regulatory T-cells] as a therapeutic modality to treat inflammatory skin disorders.”

Chinese internet search king Baidu (BIDU 11.34%) was looking very regal on Wednesday, at least as far as its U.S.-listed equity was concerned. The company’s American depositary receipts (ADRs) shot more than 11% higher in price on the back of two successive, bullish analyst updates in as many days. That double-digit gain came during a trading session when the S&P 500 index fell by 0.1%.

Bet on Baidu, says analyst

Well before market open, Jefferies‘ Thomas Chong upped his price target on Baidu substantially. He now believes the company’s ADRs could rise to $157 per ADR, where before he thought their ceiling was $108. In making the change, he maintained his buy recommendation on the company.

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According to reports, Chong is convinced that the artificial intelligence (AI) Baidu has embraced so fully and rapidly will have a very positive effect on its fundamentals.

He noted several positive developments in this area, specifically the company’s success in partnering with large companies on AI cooperation, and its becoming a top earner of AI cloud revenue. Additionally, one factor that sets Baidu apart is that it’s developing its own AI accelerator chip, the Kunlun.

One big bump

Chong’s upbeat new take on Baidu might not have had as much of an impact on Wednesday if it hadn’t been for a peer’s recommendation upgrade the day before.

On Tuesday, Richard Kramer at Arete changed his rating on Baidu for the better. This is understating the case, as he moved it all the way up from sell to buy, tagging it with a price target of $143 per ADR.

On Monday, investors clearly saw excellent value in the stock of Ocugen (OCGN 11.68%), a biotech that concentrates on treatments for eye disorders. They traded the company’s shares up by more than 12%, on the back of a fresh licensing agreement signed with a peer in Asia. That 12% absolutely trounced the 0.5% rise of the S&P 500 index today.

A licensing deal with a major Asian pharma

Ocugen announced that it has signed a licensing deal with Kwangdong Pharmaceutical in South Korea. Under the terms of the arrangement, Kwangdong will own the exclusive rights throughout South Korea for OCU400, an investigational drug targeting retinitis pigmentosa (RP). This is a disorder of the retina that causes progressive loss of vision.

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For the license, Ocugen is to be paid up-front fees and near-term development milestones amounting to as much as $7.5 million. The healthcare company can also earn milestones of $1.5 million for each $15 million of sales through Kwangdong. Ocugen said that if and when commercialized, OCU400 could hit sales of at least $180 million in the first 10 years of being on that market.

Lastly, the American company stands to earn royalty payments of 25% of the net sales of the drug in South Korea.

The start of something big?

Ocugen’s hopes for the drug seem quite realistic, given that — according to its research — roughly 7,000 people in South Korea suffer from RP. And that’s the potential in only one country; if the drug is successfully brought to market elsewhere, this might be only the tip of the iceberg.

According to data compiled by S&P Global Market Intelligence., AppLovin‘s (APP 1.87%) stock was among the market’s most-loved this week, rising by nearly 19% in price over the period. That was entirely understandable, as the shares were tapped for an inclusion on one of the top stock indexes in the world, and capped the week by being the subject of an analyst price target raise.

Index inclusion

Just after market close last Friday, index compiler S&P Dow Jones Indices, a division of S&P Global, announced that AppLovin would be a component stock of its bellwether S&P 500 (^GSPC -0.05%). This was among a series of adjustments made by S&P Dow Jones Indices as part of its quarterly “rebalancing” to reflect changes in market cap for certain stocks.

Image source: Getty Images.

AppLovin is being accompanied by next-generation brokerage Robinhood Markets and mechanical/electrical systems specialist EMCOR Group in the current round of S&P 500 advancement. The three stocks are displacing current components MarketAxess Holdings, Caesars Entertainment, and Enphase Energy.

These changes will take effect before market open on Monday, Sept. 22.

Double-digit potential

Friday morning, Wedbush analyst Alicia Reese added to the generally positive sentiment on AppLovin by raising her price target on the stock. That hike was substantial, as the pundit cranked it 17% higher to $725 per share, well up from the previous $620. At AppLovin’s most recent closing price, the new level anticipates upside of nearly 25%.

According to reports, Reese’s move was based on what she considers to be strong and sustainable growth in several of the company’s customer segments, including gaming and e-commerce.

On a very good Friday for the stock market, Biohaven‘s (BHVN 6.33%) performance was exceptional. The clinical-stage biotech‘s share price inflated by over 6% that trading session thanks to regulatory news it delivered in the morning. Even the surging S&P 500 index couldn’t come close to that kind of increase, with its 1.5% gain on the day.

Regulatory progress

Biohaven revealed in a filing with the Securities and Exchange Commission (SEC) that it has been updated on the progress of its New Drug Application (NDA) for troriluzole. The company said that the Food and Drug Administration (FDA) informed it that an advisory committee meeting to discuss the submission at the regulator was no longer necessary.

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Troriluzole is a drug that targets spinocerebellar ataxia, a cluster of inherited and progressive neurological disorders that affect the body’s movement. The development and regulatory application process for the drug has been halting, with the FDA initially refusing to accept the company’s filing. Biohaven ran a new late-stage clinical trial and is using its data for the current NDA.

Although the cancellation of the advisory meeting implies the regulator has, in effect, already reached a decision, it might not necessarily be one favorable to the company. Investors are best advised to wait until the actual decision is rendered to make a decision on whether or not to buy this stock.

Good chance for success, apparently

Having said that, according to research from RBC Capital Markets analyst Leonid Timashev cited by Investor’s Business Daily, around two-thirds of applications where an advisory committee meeting is cancelled ultimately won approval (from 2019 until the present). Given that, the market’s very bullish reaction to the news is understandable.

Pandemic communications star Zoom Communications (ZM 9.98%) stock, um (I’m trying not to say “zoomed”), moved ahead quickly Friday morning, rising 8% through 9:50 a.m. ET after beating soundly on its fiscal Q2 2026 earnings report last night.

Analysts forecast Zoom would earn $1.38 per share, adjusted for one-time items, on sales of $1.2 billion. Zoom earned $1.53 instead, and sales were a bit ahead of $1.2 billion.

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Zoom Q2 earnings

The report wasn’t quite as good as that makes it sound. Sales grew less than 5% year over year, and Zoom’s earnings as calculated according to generally accepted accounting principles (GAAP) weren’t quite as robust as the “adjusted” figure. GAAP profits were actually only $1.16 per share.

Still — and here I’m going to say it — those earnings zoomed 66% higher in comparison to last year’s Q2.

(For what it’s worth, the rise in adjusted earnings was only 10%).

Is Zoom stock a buy?

Commenting on the results, CEO Eric Yuan said “Zoom is at the forefront [of how] AI is transforming the way we work together,” essentially arguing that Zoom is an artificial intelligence stock — and the numbers back him up.

Zoom generated an incredible $508 million in Q2 free cash flow (FCF), up 39% year over year, and the company’s generated nearly $1 billion ($971.3 million, to be precise) in FCF so far this year. If Zoom can keep going at that rate, the company could conceivably rack up nearly $2 billion in cash profits this year, and at a market cap of only $24 billion, this would value the stock at barely 12 times FCF.

Whether Zoom’s growing at 66%, 39%, or even only 10%, that probably makes it a great growth stock buy.