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On Tuesday, Canaccord Genuity analysts updated their financial model for Rhythm Pharmaceuticals (NASDAQ:RYTM), leading to a raised price target for the company's shares. The new target is set at $92.00, up from the previous $81.00, while the firm maintained a Buy rating on the stock. The stock, currently trading at $54.96, has shown impressive momentum with a 9.92% gain over the past week. According to InvestingPro, four analysts have recently revised their earnings estimates upward for the upcoming period, with price targets ranging from $63 to $94.
This revision comes in the wake of Rhythm Pharmaceuticals' announcement of positive Phase 3 data for setmelanotide in treating acquired hypothalamic obesity (HO). The study highlighted a significant -19.8% placebo-adjusted BMI reduction from baseline, with a P-value of less than 0.0001, indicating a high level of statistical significance. The company, valued at $3.47 billion, maintains impressive gross profit margins of 89.73%, though InvestingPro analysis indicates it remains unprofitable with a net loss of $264.57 million in the last twelve months.
In response to the robust clinical results, Canaccord Genuity has adjusted the probability of success (POS) for setmelanotide's approval in the U.S. and Europe to 100%, a significant increase from the previous 80%. However, the analysts have chosen to maintain a conservative 70% POS for the Japanese market, noting that there is potential for further upside with expected data in the first quarter of 2026.
The positive clinical outcomes have led to an increase in the year-end 2025 price target for Rhythm Pharmaceuticals. The analysts expressed confidence in the stock, reiterating their Buy rating and acknowledging the potential for future growth based on the drug's development trajectory and anticipated market performance.
In other recent news, Rhythm Pharmaceuticals has reported positive results from its Phase 3 TRANSCEND trial, showcasing a significant reduction in body mass index (BMI) for patients treated with setmelanotide compared to those on placebo. The 52-week study demonstrated a -19.8% placebo-adjusted BMI reduction, with the drug achieving a mean BMI change of -16.5% against a +3.3% increase for the placebo group. Following these results, several analyst firms have adjusted their outlooks on Rhythm Pharmaceuticals. Oppenheimer maintained its Outperform rating with a $76 price target, citing the drug's potential to become the standard-of-care for hypothalamic obesity. BofA Securities upgraded the stock from Neutral to Buy, increasing the price target to $63, and noted the opportunity presented by the company's pipeline. Stifel reiterated its Buy rating with a $78 target, highlighting the trial's success in a challenging patient population. Rhythm Pharmaceuticals plans to file a supplemental New Drug Application in the third quarter of 2025, aiming for a priority review due to the drug's Breakthrough Therapy Designation. The company is also preparing to present full data from the TRANSCEND study at an upcoming medical meeting.
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