Jefferies maintains buy rating on Rhythm Pharmaceuticals stock

On Thursday, Jefferies analysts reaffirmed their Buy rating on Rhythm Pharmaceuticals stock (NASDAQ:RYTM), maintaining a price target of $80.00. Currently trading at $64.40 and showing impressive gross profit margins of 89.62%, the stock has delivered a 61.31% return over the past year. The analysts highlighted two key developments expected in the second half of the year that could extend the company’s franchise well beyond its 2032-2034 loss of exclusivity.

The first development involves Phase II oral HO data anticipated in the third quarter, along with Phase IB weekly subcutaneous HO data by the end of the year. Both are considered de-risked and significant for the company’s growth prospects.

Additionally, the analysts noted the potential impact of PWS data expected by year-end. While not currently reflected in the stock, management sees a 50/50 chance that it could provide proof of concept for oral and weekly subcutaneous treatments, offering a differentiated weight loss benefit.

The possibility of mergers and acquisitions was also mentioned as a potential scenario once the pipeline and lifecycle management are further de-risked, according to Jefferies analysts. With a strong current ratio of 3.3 and based on InvestingPro’s Fair Value analysis, the stock appears fairly valued at current levels.

In other recent news, Rhythm Pharmaceuticals reported its Q1 2025 earnings, revealing a larger-than-expected loss per share of -$0.81, missing the consensus estimate of -$0.6734. Revenue for the quarter was $37.72 million, falling short of the anticipated $40.7 million. Despite this, the company experienced a 45% year-over-year increase in net product revenues, reaching $11.7 million, and ended the quarter with $314.5 million in cash. Stifel analysts raised their price target for Rhythm Pharmaceuticals to $94, maintaining a Buy rating, citing confidence in the company’s prospects, particularly for its obesity drug setmelanotide. Citizens JMP analysts also reaffirmed a Market Outperform rating with an $84 target, highlighting the company’s ongoing developments. Rhythm Pharmaceuticals presented promising data on setmelanotide’s efficacy in reducing BMI and hunger in patients with hypothalamic obesity at European congresses. The company plans to submit a supplemental New Drug Application for setmelanotide for acquired hypothalamic obesity in Q3 2025. As the company advances its pipeline, it anticipates significant potential value from its next-generation oral MC4R agonist, bivamelagon, with Phase 2 data expected next quarter.

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