Bullish indicating open at $55-$60, IPO prices at $37
On Tuesday, Jefferies, a well-known financial services company, increased its price target for Arcutis Biotherapeutics Inc . (NASDAQ: NASDAQ:ARQT) shares to $19.00, up from the previous $19.00, while maintaining a Buy rating on the stock. According to InvestingPro data, the stock appears undervalued at its current price of $15.33, with analyst targets ranging from $15 to $29. The revised price target reflects a positive outlook for the biopharmaceutical company, which specializes in developing innovative treatments for skin diseases.
The adjustment in price target by Jefferies comes as Arcutis continues to show promising performance with its product Zoryve, which is gaining traction in the market. The company’s impressive gross profit margin of 90% and remarkable revenue growth of 230% in the last twelve months support this positive outlook. According to the analyst at Jefferies, Arcutis is well-positioned to benefit from a shift in investor preference towards commercially focused biotech companies. This shift is attributed to broader market dynamics, such as potential changes in government administration and a desire for lower risk profiles amid market volatility.
Arcutis has shown impressive growth with Zoryve, which is estimated to have an annualized run rate of approximately $260 million, less than three years after its launch. The company’s consistent quarterly earnings surpassing expectations have also contributed to the analyst’s positive assessment. InvestingPro analysis reveals the company maintains strong liquidity with a current ratio of 4.15, while operating with a moderate debt level. Get access to 8 more exclusive InvestingPro Tips and comprehensive financial analysis through the Pro Research Report.
The analyst at Jefferies highlighted Arcutis as a growth-at-a-reasonable-price (GARP) investment opportunity within the small to mid-cap (SMID-cap) biotech sector. The increased price target to $19 from $16 is a testament to the company’s solid performance and the analyst’s confidence in its future prospects.
The endorsement from Jefferies reaffirms the Buy rating for Arcutis, suggesting that the company’s stock remains an attractive investment. The firm’s analysis indicates that Arcutis is likely to continue its upward trajectory, supported by its successful commercialization efforts and ability to consistently exceed financial expectations.
In other recent news, Arcutis Biotherapeutics Inc. reported its fourth-quarter 2024 earnings, revealing an unexpected earnings per share (EPS) beat of -$0.09, surpassing the forecasted -$0.28. The company’s revenue for the quarter reached $71.3 million, exceeding the anticipated $54.72 million, marking a significant 413% year-over-year increase. The Zoryve franchise sales were notably strong, reaching $69.4 million, outperforming both the pre-announced figure of approximately $63 million and the consensus estimate of $55 million. Mizuho (NYSE:MFG) Securities responded to these positive developments by raising their price target for Arcutis shares to $21.00 from $20.00, while maintaining an Outperform rating. The firm also increased its sales projection for the Zoryve franchise in 2025 to approximately $299 million, up from the previous forecast of $277 million.
Additionally, the U.S. Food and Drug Administration (FDA) has accepted a supplemental New Drug Application for ZORYVE cream 0.05%, setting a target action date of October 13, 2025. This acceptance is based on positive efficacy and safety data from several clinical trials, which showed significant improvements in children with atopic dermatitis. These developments reflect Arcutis’ strong execution throughout 2024 and its positioning for continued growth, as highlighted by the company’s management. The company remains optimistic about meeting the consensus revenue forecast of $280-$285 million for 2025, driven by new product indications and market expansions.
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