7. Paetec Holding (PAET)
Company Profile: Paetec Holding provides data and voice communication services to enterprises and other telecom carriers. The company recently acquired Cavalier Telecom, which has added to sales, but Paetec is still struggling to recover from the recession.Share Price: $4.44 (June 27) Stock Performance This Year: 18% Analyst Consensus: Of the 14 analysts following Paetec, eight have a "buy" rating on the stock and another five say investors should hold shares. One firm has a "sell" rating on the stock. The average price target of $5.93 represents 33% upside potential. Bullish Case: D.A. Davidson analyst Donna Jaegers wrote in a May 24 research note that the stock's current price undervalues the Paetec's "strong existing customer base and fiber assets. We think PAET is a good value investment at current prices and think the stock can move up from the $6.50 level in the next year," Jaegers wrote. Jaegers also notes that Paetec's management was upbeat on data center sales during the company's analyst day in May, as the company "has approximately $40 million to $50 million in data center revenues currently and hopes to grow that to $400 million by 2015." Meanwhile, TheStreet Ratings has a "sell" rating on the communications company, citing "deteriorating net income, generally weak debt management, disappointing return on equity and feeble growth in its earnings per share."
6. Keryx Biopharmaceuticals (KERX) Company Profile: Keryx is a biopharmaceutical company with a focus on products for the treatment of life-threatening diseases, including renal disease & cancer. Share Price: $4.62 (June 27) Stock Performance This Year: 1% Analyst Consensus: Eight analysts have a "buy" rating on Keryx, including those at firms like Oppenheimer and Ladenburg Thalmann. The only other research shop following the company rates the stock a "hold." The average analyst price target of $10 represents potential upside of 103% from current levels. Bullish Case: Oppenheimer analyst Boris Peaker wrote in a June 7 research note that he is "cautiously optimistic about the ongoing Phase III trial of perifosine in late-stage colorectal cancer," and that his model suggests a price target for Keryx of $8. He bases this target on the assumption that the patent expiration set for July 2013 will be extended by five years to July 2018. TheStreet Ratings does not cover Keryx Biopharmaceuticals.
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