Concerns about interest rate hikes, supply chain kinks, geopolitical unrest, and of course, inflation sparked a flight to safety in the investing world in 2022. As a direct result, growth stocks, on balance, plummeted last year. 

This rapid deflationary trend may have created some once-in-a-lifetime investing opportunities, however. Wall Street analysts, for example, think there are literally dozens of beaten-down growth equities capable of delivering exponential returns over the course of the next decade.

Which growth equities are analysts particularly keen on? These two penny stocks (stocks with share prices under $5) are incredibly undervalued, according to Wall Street. 

Black chalkboard graph illustrating an exponential trend.

Image source: Getty Images.

1. ATAI Life Sciences

The financial services firm H.C. Wainwright & Co. recently issued a $20 price target on ATAI Life Sciences (ATAI 2.40%) stock. This 12-month price target implies an upside potential of 969% from current levels.  

ATAI is a clinical-stage biopharma that funds subsidiaries to develop psychedelic-based treatments for drug dependency and mental health disorders. Since the company's public debut in mid-2021, ATAI's shares have lost a staggering 90.6% of their value. 

ATAI Chart

ATAI data by YCharts

What went wrong? ATAI has been tripped up by underwhelming clinical trial results for product candidates like KUR-101 (an opioid use disorder candidate), and PCN-101 (aka R-ketamine, for treatment-resistant depression).

Why are analysts optimistic about a near-term rebound? Two reasons. First off, ATAI sports a highly diverse clinical portfolio consisting of therapies for various forms of depression, stress, anxiety, and opioid use. A win in any of these high-value settings could spark a comeback.

Second, ATAI is one of the best-capitalized psychedelic drug developers in the game. At last count, the biopharma had $304 million in cash, cash equivalents, and short-term investments. That amount should be sufficient to get atai through to its next set of major clinical catalysts.  

2. Sorrento Therapeutics

Sorrento Therapeutics (SRNE.Q) is a commercial-stage biopharma company. Over the past 12 months, the drugmaker's shares are down a whopping 70%. Sorrento's stock has been under pressure of late due to investors' waning interest in the COVID-19 product scene.

During the pandemic, Sorrento hit the gas on developing COVID-19 diagnostics and therapies. With the pandemic fading into the background, however, the commercial opportunity associated with these products has since diminished. 

Wall Street appears to think this sell-off is unwarranted. Last Nov., the financial services firm Cantor Fitzgerald issued a $5 price target on Sorrento's stock. This price target equates to a 410% upside potential at the stock's current level. 

What's behind this optimism? Beyond COVID-19, Sorrento sports a diverse lineup of clinical candidates for pain, cancer, and autoimmune disorders. Bulls think this pipeline is significantly undervalued right now. 

Can Sorrento's stock mount a comeback soon? At the time of this writing, the biopharma's shares have already gained 11% so far this year. That's an encouraging sign that bargain hunters might be moving into the stock.

A positive pipeline update could accelerate the stock's forward momentum. That being said, there is no guarantee that Sorrento will have good news to share with investors in the near term.