Lake Street initiates coverage on Aytu Biosciences stock with Buy rating

Investing.com - Lake Street Capital Markets initiated coverage on Aytu Biosciences (NASDAQ:AYTU) with a Buy rating and a price target of $8.00 on Tuesday. According to InvestingPro data, the stock is currently trading at attractive valuations with a Price/Book ratio of 0.56x, while showing strong momentum with a 28% return over the past six months.

The research firm cited Aytu’s recent acquisition of EXXUA, a differentiated antidepressant with a unique mechanism of action, as a key factor in its positive outlook for the company.

Lake Street noted that EXXUA avoids two of the most troubling adverse events experienced by patients taking antidepressants, giving it an advantage in the crowded but "unsatisfied" antidepressant market.

The firm expects EXXUA’s launch to "materially alter Aytu’s financial profile," driving revenues to record levels by fiscal year 2027.

While Aytu shares have already responded positively since the EXXUA transaction was announced, Lake Street believes "substantial upside remains" as generic overhang issues are resolved and the EXXUA launch progresses.

In other recent news, Aytu BioPharma reported a strong financial performance for Q3 FY2025, with net revenue increasing by 32% year-over-year, reaching $18.5 million. The growth was driven by the company’s ADHD and pediatric portfolios, which saw revenue increases of 25% and 77%, respectively. Aytu BioPharma also achieved a net income of $4 million, marking a significant turnaround from a prior-year loss. Additionally, the company has secured exclusive rights to commercialize EXXUA, a novel antidepressant, in the U.S. market, with a launch planned for the fourth quarter of 2025. This new drug, approved by the FDA for treating major depressive disorder, is expected to be a significant growth driver for the company. In preparation for EXXUA’s launch, Aytu BioPharma has expanded and extended its lending agreement with Eclipse Business Capital LLC to provide additional working capital flexibility. The company’s strategic focus remains on acquiring differentiated CNS products, aligning with its recent pivot towards branded central nervous system therapies.

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