Does high risk mean high reward? Not necessarily, so say the pros on Wall Street. Specifically citing penny stocks, or stocks that trade for less than $5 per share, analysts advise caution as these names might still be in the early innings, or it could be that they face an uphill battle that is just too steep. Luring investors with their bargain price tags, these stocks might be up against overpowering headwinds or have weak fundamentals. However, analysts argue there are early-stage companies that reflect promising opportunities, with the low share prices meaning you get significantly more bang for your buck. What’s more, even what seems like minor share price appreciation can result in massive percentage gains. The bottom line? Not all risk is created equal. To this end, the pros recommend doing some due diligence before making an investment decision. Using TipRanks’ database, we pulled two penny stocks that have earned a “Strong Buy” consensus rating from the analyst community. Not to mention each offers up massive upside potential. Oncolytics Biotech (ONCY) We’ll start with Oncolytics, a biotechnology company focused on the use of immunotherapy combinations as treatments for cancer. The company’s approach uses pelareorep, an immune-oncolytic virus, to deliver therapeutic agents that both directly target the tumor and activate the immune system’s natural defenses. Oncolytics is conducting its various research programs in partnership with several of the big names in biotech, including Pfizer, Merck, Roche, and Bristol-Myers Squibb. The company’s development pipeline is testing the compatibility of pelareorep in conjunction with the larger companies’ anti-cancer drugs. To date, pelareorep demonstrated positive results making early-stage breast cancer tumors more amenable to checkpoint inhibitor therapy. The data showed that pelareorep induced a robust anti-tumor immune response in some types of breast cancer. There are three ongoing clinical programs in place relating to breast cancer: The company’s Phase 2 AWARE-1 study, combining pelareorep with Roche’s anti-PD-L1 mAb Tecentriq, is assessing the impact of the combination on early-stage breast cancer response rate and overall survival. Meanwhile, the BRACELET-1 Phase 2 study will evaluate efficacy of pelareorep in combination with Pfizer’s anti-PD-L1 mAb Bavencio in breast cancer. A third Phase 2 breast cancer trial, IRENE, will evaluate pelareorep’s ability to improve outcomes in triple-negative breast cancer. The study is assessing pelareorep’s safety and efficacy in combination with retifanlimab. ONCY strong pipeline and $3.01 share price have scored it substantial praise from the pros on Wall Street. H.C. Wainwright analyst Patrick Trucchio conducted a deep dive into Oncolytics, and concluded that the company offers a sound investment opportunity. “Oncolytics’ lead compound, pelareorep (pela)… is on the cusp of demonstrating potential to upend the treatment paradigms of several cancers, in our view… We believe it is the studies being conducted in breast cancer (BrCa) that could generate substantial value for shareholders in 2021 and beyond,” Trucchio opined. The analyst added, “Since the approval of the first OV T-VEC in 2015, there have been at least eight licensing or acquisition deal announcements, including the $394M acquisition of Viralytics by Merck in February 2018 and the €210M acquisition of ViraTherapeutics by Boehringer Ingelheim in September 2018. Oncolytics has collaboration, supply agreements, and combination arrangements with many major biopharmaceutical companies and organizations involved in cancer research… Positive data readouts in any or all of the plethora of combination trials underway with pela and ICI could catalyze a much higher valuation than the recent M&A, in our view.” To this end, Trucchio rates ONCY a Buy, and his $15 price target implies a robust one-year upside potential of ~397%. (To watch Trucchio’s track record, click here) Turning now to the rest of the Street, other analysts are on the same page. With 5 Buys and no Holds or Sells, the word on the Street is that ONCY is a Strong Buy. Given its $8.51 average price target, upside of ~182% could be in store for investors. (See ONCY stock analysis on TipRanks) Xeris Pharmaceuticals (XERS) Sticking with the biotech sector, let’s take a look at Xeris Pharmaceuticals. This company has one important advantage over many of its peers: it has a drug on the market, approved for use. Gvoke, its self-administered glucagon injection device, was approved by the FDA in September 2019 for use by adults and kids suffering severe low blood sugar (hypoglycemia) due to diabetes. The product has been generating revenues for Xeris for the past 5 quarters, and in 2H20 those revenues began to ramp up. In the company’s most recent quarterly report, for 4Q20, Xeris showed an 11% sequential increase in Gvoke prescriptions and quarterly sales of $7.1 million; full-year sales of the self-injection device totaled $20.2 million. The company also received, in December 2020, a positive opinion from the European Medicine Agency on Oglou, the room-stable liquid glucagon used in Gvoke, as well as European Commission authorization for marketing starting in February 2021. Xeris is targeting 4Q21 to launch Oglou in the European Union. The company is not resting on its Gvoke laurels. It has an active development pipeline, with several additional self-administered glucagon devices, as well as additional drug candidates in development for the treatment of diabetes and epilepsy. Analyst Difei Yang, writing from Mizuho, sees Gvoke as the key to Xeris’ path forward. “Gvoke continued to gain market share in the quarter (we estimate recent weekly share at ~16%) from legacy glucagon kits, but we note that the total glucagon market growth rate has stagnated as a result of Covid-19. We forecast a re-acceleration of the glucagon market in 2H21 as Covid-19 abates, and expect Gvoke fundamentals to improve when the market growth rate picks up,” Yang wrote. Along with those comments, the analyst put a Buy rating on XERS shares, and a $14 price target that indicates room for 225% growth over the coming year. (To watch Yang’s track record, click here) This is another stock that Wall Street likes, as shown by the unanimous Strong Buy consensus rating derived from 3 recent positive reviews. Xeris shares are selling for $4.30 right now, and their $10.67 average price target implies an upside of ~148% in 2021. (See XERS stock analysis on TipRanks) To find good ideas for penny stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.