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On Thursday, H.C. Wainwright adjusted its price target for Keros Therapeutics (NASDAQ:KROS) shares, bringing it down to $40 from the previous $47, while still maintaining a Buy rating on the stock. Currently trading at $10.94, the stock sits well below analysts’ targets, which range from $15 to $76. The revision follows a review of various factors impacting the company’s prospects, including recent clinical study developments and partnership agreements. According to InvestingPro, the stock has declined over 84% in the past year.
Analyst Andrew Fein at H.C. Wainwright cited the paused Phase 2 TROPOS study, which is anticipated to resume in the second half of 2025, as a reason for the revised price target. The study’s temporary halt is due to observed cases of pericardial effusions, a condition involving fluid buildup around the heart. Despite these challenges, the firm remains optimistic about the potential pathways for the program. InvestingPro data shows the company maintains a strong liquidity position with a current ratio of 19.03, though it’s currently burning through cash rapidly.
In addition to the TROPOS study, Fein highlighted the upcoming Phase 1 healthy volunteer data for KER-065, expected in the first quarter of 2025. This data is deemed crucial in evaluating the drug’s potential for treating neuromuscular diseases such as Duchenne muscular dystrophy (DMD). The analyst emphasized the importance of understanding KER-065’s safety and efficacy profile to set investor expectations.
The price target adjustment also reflects changes in Keros Therapeutics’ revenue and operating expense forecasts, particularly considering the uncertain future of cibotercept and the recent partnership with Takeda for the development of elritercept. According to Fein, elritercept now stands as the primary near-term value driver for the company.
Fein concluded by reiterating a Buy rating for Keros Therapeutics, noting that while the price target has been reduced to $40, the firm remains confident in the company’s potential to navigate the challenges ahead and deliver value to investors. Based on InvestingPro’s Fair Value analysis, the stock appears undervalued at current levels. Subscribers can access 10 additional ProTips and comprehensive financial metrics to make more informed investment decisions.
In other recent news, Keros Therapeutics has seen significant developments, particularly concerning its clinical trials and partnerships. The company has announced the effectiveness of its global license agreement with Takeda, which includes an upfront payment of $200 million. This partnership focuses on advancing Keros’s therapeutic candidate elritercept and is expected to provide a strong financial foundation for ongoing research and clinical trials.
Meanwhile, Keros has faced challenges with its Phase 2 TROPOS trial for cibotercept, aimed at treating pulmonary arterial hypertension (PAH). The trial was terminated early due to safety concerns related to pericardial effusion. As a result, Cantor Fitzgerald downgraded Keros’s stock rating from Buy to Neutral, while Piper Sandler and Oppenheimer significantly lowered their price targets but maintained positive ratings, indicating potential future upside.
Additionally, Keros is shifting its focus to KER-065 for neuromuscular diseases, with updates expected soon. Despite these hurdles, Scotiabank (TSX:BNS) remains optimistic, maintaining a Sector Outperform rating and highlighting the potential of Keros’s lead asset, elritercept, in collaboration with Takeda. The financial stability from the Takeda deal and a robust balance sheet are expected to support Keros’s ongoing and future endeavors.
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