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On Tuesday, Brookline Capital Markets analyst Tyler Bussian upgraded CervoMed stock from Hold to Buy, setting a price target of $16.00, well above the current trading price of $1.98. This adjustment comes in the wake of promising interim data from the Open-Label Extension (OLE) of the RewinD-LB trial. The study’s results have shown Neflamapimod to be more effective than the previously used control drug across almost all measured outcomes. According to InvestingPro data, analyst targets currently range from $4 to $12, suggesting significant upside potential.
Bussian’s optimistic stance on CervoMed is rooted in the recent clinical trial findings, which suggest that Neflamapimod could be a significant advancement in treatment. The analyst’s decision to set a price target is based on a discounted cash flow (DCF) analysis, a common method in finance used to estimate the value of an investment based on its expected future cash flows. InvestingPro analysis indicates the stock is currently undervalued, with strong financial health metrics including a healthy cash position exceeding debt levels.
CervoMed is expected to continue releasing interim data and completing OLE readouts throughout the year. These results will be critical as the company moves forward with its discussions with the FDA about the potential for a Phase 3 program.
The positive interim data has been a key driver for the upgrade, as it indicates the potential for Neflamapimod to outperform current treatment options. This could lead to a significant improvement in the management of the condition being targeted by the drug.
As CervoMed progresses with its clinical trials and engages in discussions with the FDA, investors and industry observers will be closely monitoring the developments. The company’s shares are now rated as a Buy by Brookline Capital Markets, reflecting confidence in its future prospects based on the strength of the clinical data released to date.
In other recent news, CervoMed has been actively navigating the outcomes of its Phase 2b RewinD-LB trial for neflamapimod, a potential treatment for dementia with Lewy bodies. The trial did not meet its primary or secondary endpoints, leading to a downgrade from Morgan Stanley (NYSE:MS) to Underweight and Chardan Capital Markets adjusting its rating from Buy to Neutral. Despite these setbacks, Boral (OTC:BOALY) Capital has upgraded CervoMed to Buy, setting a price target of $10.00, citing optimism about future data from the open-label extension trial. Canaccord Genuity also adjusted its price target to $12.00, maintaining a Buy rating, while noting the company’s decision to pause planned Phase 3 activities for 2025. CervoMed is addressing the trial’s dose-effect issue, attributed to lower-than-expected drug bioavailability, by considering a higher dose for future studies. The company anticipates that data from a newer drug batch in the open-label extension phase, expected in 2025, will be pivotal in determining the drug’s future development. Additionally, the results from a French Phase 2a trial, testing a different dosing regimen, are awaited to provide further insights into the drug’s efficacy. These developments reflect CervoMed’s ongoing efforts to optimize neflamapimod’s dosing strategy and advance its clinical program.
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