The SVB Financial Group (SIVB -60.41%) meltdown is sure to ramp up volatility in U.S. stock markets this week. The core reason is that no one knows for sure what this latest bank implosion will mean in terms of investor sentiment.
If this unexpected calamity turns out to be a localized event, for instance, the Federal Reserve could very well decide to hold off on additional rate hikes to avoid a steep correction in U.S. equity prices. Interest rate hikes, after all, were a key culprit in SVB’s precipitous downfall.
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Then again, Federal Reserve Chairman Jerome Powell may tune out this event in his quest to tamp down historically high inflation levels. The stark contrast between these two approaches is a surefire recipe for market volatility.
Which stocks are poised to make big moves in the coming week? These three Nasdaq-listed stocks should be on investors’ collective radars this week. Here’s why.
1. Acadia Pharmaceuticals
After the closing bell last Friday, Acadia Pharmaceuticals (ACAD -0.68%) announced the Food and Drug Administration (FDA) approval of its Rett syndrome medication Daybue. Daybue is the first drug approved by the agency specifically for this rare neurological disorder. At peak, Wall Street analysts think the drug could haul in half a billion dollars annually, but there is a real chance it could generate sales in excess of $1 billion per year.
This is Acadia’s second FDA approval, with the Parkinson’s disease psychosis medication Nuplazid being the biopharma’s inaugural commercial-stage product. These two medications ought to transform the drugmaker into a cash-flow-positive operation on a consistent basis. Even so, the initial market response to this landmark approval might underwhelm shareholders this week due to the overhang from the high-profile bank failure. A muted response, however, may represent a stellar buying opportunity.
2. Axsome Therapeutics
Axsome Therapeutics (AXSM -5.78%) is a central nervous system specialist with two FDA-approved medicines under its roof. The drugmaker’s stock has been under heavy pressure this year due to the slow ramp of its newly approved major depressive disorder medication, Auvelity. Axsome’s stock, however, might come under even more pressure in the days ahead, thanks to its exposure to SVB.
In a Securities and Exchange Commission (SEC) filing last Friday, the company revealed it has material cash deposits with the now-defunct bank. Axsome, however, didn’t provide any details regarding the amount of cash in its former SVB account. The filing did note that the company expects cash held elsewhere, along with an open loan facility, ought to be sufficient to fund operations until it hits cash-flow positivity.
While this filing is overall upbeat in its message, this irrational, risk-averse market may very well ignore the all-important details of this SEC filing. However, an unwarranted drop in Axsome’s shares could be a compelling buying opportunity for patient investors. Axsome’s top line, after all, is forecast to rise by leaps and bounds in the years ahead.
3. Roku
Roku (ROKU -0.88%) is a TV streaming juggernaut. Over the next 24 months, Wall Street analysts expect the company to deliver a whopping 22% jump in annual revenue. As a result of this blistering top-line growth, Roku’s shares were up by an eye-catching 47% this year. The streaming company’s recent forward momentum may come to an abrupt halt on Monday, however.
ROKU data by YCharts.
On Friday, Roku revealed via an SEC filing that it had $487 million on deposit with SVB. The company highlighted in the filing that this amount represents roughly 26% of its cash and cash equivalents balance as of March 10, 2023.
Although Roku is expected to recoup some of this cash via an upcoming dividend on the uninsured portion of this deposit, this risk-averse market probably won’t give the streaming giant the benefit of the doubt. The good news is that Roku does have sufficient cash on deposit at other large financial institutions to fund operations for the next 12 months and beyond. In turn, bargain hunters may want to have dry powder on hand in case this tech stock slumps meaningfully on this financial disclosure.
This content was originally published here.
