Genmab (GMAB) and Sonic Automotive (SAH) are climbing 5% and 3%, respectively, after investment banks issued favorable notes about the stocks.

Leerink Partners raised its rating on GMAB to Outperform from Market Perform while Needham lifted its price target on Sonic to $100 from $74.

Why Leerink Upgraded GMAB

Leerink does not expect Johnson & Johnson (JNJ) to exercise its option to develop GMAB's GEN3014, a treatment candidate for relapsed/refractory multiple myeloma patients. But Leerink contends that this refusal is already reflected in GMAB's stock.

Moreover, Leerink is upbeat on GMAB's history and its pipeline of late-stage drug candidates. The investment bank kept a $27 price target on the shares, versus the shares' current level of around $20.75.

Why Needham Raised Its Price Target on SAH

Needham believes that Sonic is managing its franchise business well, and the bank has become more upbeat on the outlook of the firm's gross margins per unit. Needham believes that the stock price does not fully reflect the growth potential of SAH's pre-owned unit, Echo Park. It kept a Buy rating on the shares.

The Recent Price Action of GMAB and SAH

In the last month, GMAB has slid 1.7%, while it is down 1.5% in the last three months.

In the last month, SAH is up 9%, while it has gained 15% in the last three months.

While we acknowledge the potential of GMAB, our conviction lies in the belief that some 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 GMAB 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.