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On Wednesday, CervoMed shares, currently trading at $2.23, received an upgrade from Boral (OTC:BOALY) Capital, moving from a Hold to a Buy status, with a new price target of $10.00. According to InvestingPro data, the stock has experienced significant volatility, falling nearly 87% over the past six months, though it maintains strong liquidity with a current ratio of 15.04. Boral Capital’s decision comes after a thorough analysis of CervoMed’s recent RewinD-LB trial results. The firm met with CervoMed’s senior management, including CEO Dr. John Alam and CFO William Elder, to discuss the trial’s outcomes and future prospects. While the company’s financial health score is rated as "FAIR" by InvestingPro, it notably holds more cash than debt on its balance sheet.
The upgrade was influenced by several factors identified during the review. Boral Capital noted a dose-effect issue which they believe was likely due to lower-than-expected drug bioavailability, potentially caused by the use of an older drug batch. CervoMed is actively addressing the issue by considering a higher dose of 80 mg for future studies.
The analysts at Boral Capital are optimistic about the company’s direction, citing the upcoming data from the OLE trial as a potential catalyst for the stock. The trial results are expected to be released in two parts, with the first set anticipated soon within Q1’s 16-week period, and a subsequent update in Q2, around June.
The firm’s statement highlighted the proactive measures taken by CervoMed to rectify the trial issues and the importance of the forthcoming OLE trial data in providing more clarity. Boral Capital believes that these steps and the expected data will validate their thesis and present a compelling opportunity for investors, hence the upgraded rating and price target. Based on comprehensive analysis, InvestingPro’s Fair Value model suggests the stock is currently undervalued, with analyst price targets ranging from $4 to $34.
In other recent news, CervoMed Inc. reported preliminary findings from its Phase 2b RewinD-LB trial for neflamapimod, a potential treatment for dementia with Lewy bodies (DLB). The trial did not show significant differences between the drug and the placebo group over 16 weeks. Despite this, the company believes neflamapimod may be effective at higher plasma drug concentrations. Data from the trial’s open-label extension phase, expected in the first quarter of 2025, will be crucial for determining the drug’s future development.
Furthermore, Canaccord Genuity adjusted its price target on CervoMed’s shares to $12.00, maintaining a Buy rating despite the significant decrease from the previous target of $65.00. Morgan Stanley (NYSE:MS) downgraded shares of CervoMed from Equalweight to Underweight following the disappointing trial results. Chardan Capital Markets also downgraded the stock from Buy to Neutral, and Brookline Capital Markets revised its stance from a "Buy" to a "Hold" rating.
These recent developments reflect the uncertainty surrounding the future of neflamapimod, as the company and investors await the analysis of data from the more recent drug batch used in the open-label extension phase of the trial.
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