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On Monday, H.C. Wainwright increased its price target for Akero Therapeutics (NASDAQ:AKRO) shares, setting a new goal of $72.00, up from the previous target of $50.00. The firm maintained its Buy rating on the stock. Currently trading at $53.12 with a market capitalization of $3.7 billion, Akero has garnered strong analyst support, with a consensus recommendation of 1.45 (Strong Buy). According to InvestingPro analysis, the stock appears overvalued at current levels. The adjustment comes after the firm updated its model to reflect the potential market value of Akero's treatment candidate, EFX, for patients with MASH and F2/F3 fibrosis.
According to the analysts at H.C. Wainwright, the revised price target is based on a risk-adjusted net present value (rNPV) model. The current risk-adjusted per-share value of EFX, which is being developed for patients with metabolic-associated steatohepatitis (MASH) and F2/F3 fibrosis, is estimated to be approximately $50.16. InvestingPro data shows the company maintains a strong financial position with a current ratio of 17.25 and holds more cash than debt on its balance sheet, providing substantial runway for development. This valuation assumes an 80% probability of success and anticipates global peak revenues of $4.5 billion by the year 2037.
The firm also provided a preliminary risk-adjusted valuation for EFX's market potential in treating well-compensated cirrhotic (F4) MASH. This valuation, which is based on the 96-week SYMMETRY study results, is estimated at $19.50 per share with a 65% probability of success. In addition, H.C. Wainwright has factored in an additional $2.81 per share for what it refers to as "excess cash" beyond a two-year forecast period.
H.C. Wainwright's analysis projects market exclusivity for Akero's EFX treatment through 2037 and conservatively assumes no terminal value after this date. However, the firm also outlined key risks that could impact the stock rating and price target. These risks include potential failed or inconclusive trial results, unforeseen safety or tolerability issues, significant delays to expected timelines, or challenges in securing sufficient funding for operations. InvestingPro subscribers have access to 8 additional key investment tips and comprehensive financial metrics to better assess these risks. The stock's beta of -0.2 indicates it often moves independently of broader market trends, potentially offering portfolio diversification benefits.
In other recent news, Akero Therapeutics has seen significant developments. The company's SYMMETRY study outcomes led Morgan Stanley (NYSE:MS) to raise its price target for the company to $96, while retaining an Overweight rating. This adjustment follows an increase in projected peak sales for Akero Therapeutics to $3.6 billion, up from the previous estimate of $2.0 billion. Also, Jefferies and H.C. Wainwright maintained their Buy ratings with a target of $50, following the promising results from Akero's Phase IIB study.
Furthermore, Akero's leading drug candidate, efruxifermin (EFX), demonstrated a significant reversal in fibrosis in the Phase 2b SYMMETRY study. This development has led Citi to initiate coverage on Akero with a positive outlook, assigning a Buy rating based on the potential of efruxifermin.
Meanwhile, Keros Therapeutics has voluntarily paused dosing in certain arms of its Phase 2 TROPOS Trial due to unexpected cases of pericardial effusion among participants. The company is actively working with regulatory authorities to understand these findings and resolve the issue. These are recent developments in the ongoing efforts by these companies to advance treatments in their respective fields.
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