We recently published a list of Jim Cramer’s Lightning Rounds: 12 Stocks Under the Spotlight. In this article, we are going to take a look at where Merus N.V. (NASDAQ:MRUS) stands against other stocks under Jim Cramer’s lightning rounds’ spotlight.
Jim Cramer, host of Mad Money, recently discussed the outlook for the stock market following a year of strong gains, cautioning that investors’ overly optimistic expectations for Federal Reserve rate cuts could lead to trouble. As the year draws to a close, brokerages are releasing their official market predictions for 2025, and so far, they are almost universally positive.
He said that this optimism is understandable given the strong earnings season and the significant stock market rally following the election. Cramer noted that many investors are betting that a business-friendly administration will continue to drive better returns.
“See, after all these gains, you gotta get a little squeamish, don’t you? Unless something drastic happens in the next few weeks, we’re in line for our second straight year of 20% plus returns for the S&P 500. First time that’s happened since 1999, ooh, not the best precedent. Plus, the market’s gotten really expensive by historical standards.”
READ ALSO: Jim Cramer Discussed 10 Stocks That Can Do Well in December and Jim Cramer’s Lightning Round: 7 Stocks to Watch
Cramer said that his main worry is that Wall Street may have gotten ahead of itself, with too many investors expecting more rate cuts from the Federal Reserve than are realistically likely. He highlighted the unusual situation that has unfolded since the Fed’s surprise double rate cut in September. While short-term interest rates have come down, long-term rates set by the bond market have actually risen, creating a stark contrast. He remarked:
“The market’s betting on a December rate cut. Anything that derails that will be bad news for the averages.”
When looking ahead to 2025, Cramer noted a significant lack of consensus about future rate cuts. He pointed to Fed funds futures for December 2025, which show a wide range of predicted outcomes. Investors are betting on anywhere from zero to eight rate cuts by then, with the most likely scenario being three cuts by the end of 2025.
Cramer explained that while he thinks three rate cuts sound reasonable, it also suggests that roughly 41% of the market is anticipating too many cuts over the next year, a scenario that could disappoint many money managers.
“So here’s the bottom line: Given all the success we’ve had in this market, we need to guard against complacency and that’s why I’m flagging my biggest worry that the market might be getting too aggressive with its expectations for rate cuts over the next year.”
Our Methodology
For this article, we compiled a list of 12 stocks that were discussed by Jim Cramer during recent episodes of Mad Money. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A scientist looking through a microscope conducting research in an immuno-oncology lab.
Merus N.V. (NASDAQ:MRUS)
Number of Hedge Fund Holders: 48
Calling Merus N.V. (NASDAQ:MRUS) a speculative stock, Cramer said:
“Okay, now this is a stock… you and I both know… This is one of those things that, it may not work out. They do have some good news. They have FDA approval of a drug, but it is still very, very speculative”
Merus (NASDAQ:MRUS) is a clinical-stage immuno-oncology company developing bispecific antibody therapeutics, with several candidates in clinical trials for the treatment of various cancers. Recently, it received approval from the U.S. Food and Drug Administration (FDA) for its therapy, Bizengri, which targets the NRG1 gene. This gene is linked to the formation and progression of multiple types of tumors, including those associated with lung and pancreatic cancers.
Bizengri marks the company’s first commercial product, providing a treatment option for patients with these aggressive cancers who have experienced disease progression despite prior systemic therapies. The FDA’s approval of Bizengri offers hope to individuals facing these hard-to-treat cancers, and it is expected to be available to patients in the near future.
Additionally, recently, it was announced that Merus (NASDAQ:MRUS) and Partner Therapeutics, Inc. have entered into an exclusive agreement granting PTx the rights to commercialize zenocutuzumab (Zeno) for treating NRG1 fusion-positive cancer in the U.S. Merus will receive an upfront payment, milestone payments, and royalties based on future sales of Zeno in the U.S. following a transition period.
Overall, MRUS ranks 3rd on our list of stocks under Jim Cramer’s lightning rounds’ spotlight. While we acknowledge the potential of MRUS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MRUS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
