JPMorgan cuts Rocket Pharmaceuticals stock rating to neutral

On Wednesday, JPMorgan analysts adjusted their stance on Rocket Pharmaceuticals (NASDAQ:RCKT), downgrading the stock from Overweight to Neutral and significantly reducing the price target to $7.00 from the previous $44.00. The change in rating follows the recent announcement of a clinical hold on Rocket Pharmaceuticals’ leading program, RP-A501, which is being developed for the treatment of Danon Disease. The stock, currently trading at $2.51, has experienced a dramatic 64.64% decline in the past week, though InvestingPro data indicates the shares are trading below their Fair Value.

The downgrade was influenced by an incident involving a patient’s death due to capillary leak syndrome (CLS) during the RP-A501 study. Despite Rocket Pharmaceuticals’ detailed explanation of the events leading to the clinical hold and their plans to optimize the immune conditioning regimen and improve patient screening criteria, JPMorgan expressed concerns. The analysts believe that this setback could lead to a more cautious approach by regulatory authorities regarding the approval of RP-A501. The company maintains a strong liquidity position with a current ratio of 9.19 and holds more cash than debt on its balance sheet, providing some financial flexibility during this challenging period.

JPMorgan’s revised outlook takes into account the potential implications of the clinical hold on the company’s stock value. The firm suggests that resolving the clinical hold, along with meeting potentially higher regulatory standards for approval, will be necessary steps for Rocket Pharmaceuticals’ shares to recover a positive trajectory.

In their commentary, JPMorgan highlighted that their updated model reflects both the strategic focus of Rocket Pharmaceuticals on AAV-mediated gene therapy cardiomyopathies and the adjusted commercial and success expectations for RP-A501 in the treatment of Danon Disease. The new price target of $7.00 set for December 2025 represents a significant decrease from the previous target, indicating a more cautious view of the stock’s future performance.

In other recent news, Rocket Pharmaceuticals has faced multiple analyst downgrades following significant developments in its clinical trials. The company announced that the FDA placed a clinical hold on its Phase 2 trial for the RP-A501 treatment for Danon disease after a patient experienced a severe adverse event. This development led to a series of analyst actions. Goldman Sachs downgraded Rocket Pharmaceuticals from Buy to Sell and reduced its price target to $2.00 from $13.00, citing concerns over the trial’s timeline and commercial viability. Scotiabank (TSX:BNS) also revised its price target to $19.00 from $51.00 but maintained a Sector Outperform rating, noting the uncertainty surrounding the Danon disease program. BofA Securities cut its price target to $9.00 from $32.00 while maintaining a Buy rating, highlighting the challenges in resuming the trial. Morgan Stanley (NYSE:MS) downgraded the stock to Equalweight from Overweight, with a new price target of $7.00, reflecting concerns about the regulatory path forward. Jefferies also downgraded the stock to Hold and reduced the price target to $2.50 from $29.00, emphasizing the uncertainties introduced by the FDA’s clinical hold. These recent developments have significantly impacted Rocket Pharmaceuticals’ outlook and investor sentiment.

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