Jefferies raises ALX Oncology stock to buy, target to $3

On Thursday, Jefferies analyst Michael Yee provided a positive outlook for ALX Oncology shares, upgrading the stock from Hold to Buy and increasing the price target from $2.00 to $3.00. Yee’s optimistic stance is based on a favorable risk/reward balance for investors who are comfortable with speculative risks. Currently trading at $1.04, the stock has experienced a significant 93% decline over the past year. According to InvestingPro analysis, the company’s market capitalization stands at $54.85 million, and the stock appears undervalued based on its Fair Value assessment.

Yee anticipates significant potential upside for ALX Oncology, hinging on several upcoming catalysts. The first is expected discussions with the FDA in the second quarter to review recent positive Phase IIB gastric cancer data, which might lead to a surprise filing. Additionally, there are two Phase IIB randomized studies for head and neck squamous cell carcinoma (HNSCC) that are being conducted in combination with PD1 inhibitors, with results anticipated in the second quarter. InvestingPro data shows the company holds more cash than debt, with a strong current ratio of 4.82, though it’s worth noting the company is quickly burning through its cash reserves.

The analyst’s comments underscore the potential of the company’s ongoing clinical trials to drive the stock’s performance. Yee’s upgrade reflects confidence in ALX Oncology’s prospects, particularly in light of the company’s current valuation when compared to its cash position.

Investors in the biotechnology sector often weigh the prospects of clinical trial outcomes heavily when considering investment decisions. Positive results can lead to increased investor confidence and, consequently, an uptick in stock prices. Conversely, negative outcomes can have the opposite effect.

ALX Oncology, listed on the NASDAQ under the ticker (NASDAQ:ALXO), is focused on developing therapies to block the CD47 checkpoint pathway, which is a target for cancer treatments. The company’s approach aims to enhance the body’s immune response against various types of cancer. InvestingPro analysis indicates an overall WEAK financial health score, with additional insights available through their comprehensive analysis tools. Subscribers can access over 10 additional ProTips and detailed financial metrics to make more informed investment decisions.

In other recent news, ALX Oncology Holdings Inc. has announced a strategic reorganization that includes a 30% reduction in its workforce, primarily affecting research and preclinical development employees. This move is expected to incur approximately $2.2 million in severance costs, with the company’s President and Chief Scientific Officer, Dr. Jaume Pons, also departing as part of the reorganization. Meanwhile, UBS has revised its price target for ALX Oncology to $2.20 from $4.00, maintaining a Buy rating despite the ASPEN-06 study’s mixed results. Stifel analysts have kept a Hold rating on ALX Oncology with a $3 target, noting potential benefits of evorpacept in combination therapies for HER2+ gastric cancer. Cantor Fitzgerald continues to support ALX Oncology with an Overweight rating, highlighting promising Phase 2 ASPEN-6 study results for evorpacept. H.C. Wainwright has adjusted ALX Oncology’s price target to $5 from $25, maintaining a Buy rating based on the final ASPEN-06 study data. These developments indicate ongoing interest and varying perspectives on ALX Oncology’s strategic and clinical progress.

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