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On Monday, Leerink Partners adjusted their financial outlook for Lexeo Therapeutics (NASDAQ:LXEO), reducing the price target to $18 from $19, while continuing to recommend the stock as Outperform. With the stock currently trading at $3.53, analyst targets range from $16 to $28, suggesting significant upside potential. The adjustment follows a recent update on the company’s clinical programs, which Leerink views as a slight positive step. InvestingPro data reveals that 5 analysts have recently revised their earnings downwards for the upcoming period.
Leerink Partners’ analysis highlighted the early clinical signal from Lexeo’s PKP2 gene therapy program as a point of interest. Although they anticipate the stock’s reaction to be tempered due to the prevailing negative sentiment surrounding gene therapy and upcoming competitive data releases later in the year, the firm sees potential in the company’s developments.
Despite Lexeo Therapeutics’ stock declining 58.81% year-to-date and 81.31% over the past year, which contrasts with the XBI’s smaller 3% drop, Leerink Partners believes that the current market valuation of Lexeo does not fully account for the company’s potential. The firm pointed out that Lexeo is trading at a negative enterprise value, which suggests that the market may be undervaluing the company’s assets and future prospects. According to InvestingPro analysis, the company maintains a strong liquidity position with a current ratio of 5.95 and holds more cash than debt on its balance sheet, though it’s worth noting the company is quickly burning through its cash reserves.
Looking ahead, Leerink Partners is awaiting the final design of the pivotal study for FA-CM, another of Lexeo’s clinical programs, which will provide a clearer picture of the expected timelines for data release and potential approval. The firm’s stance is that, with several significant potential developments expected in 2025, there is a favorable risk/reward balance for Lexeo Therapeutics shares as the second half of 2025 approaches. With a market capitalization of just $89.64 million and trading at 0.64 times book value, InvestingPro analysis suggests the stock is currently undervalued, though investors should note the company’s Weak financial health score of 1.64 out of 5.
Leerink’s analysis concludes with a reaffirmation of their Outperform rating for Lexeo Therapeutics, indicating their expectation that the stock will perform better than the average return of the stocks they cover over the next 12 to 18 months. The revised $18 price target reflects Leerink’s adjusted expectations for the company’s stock performance.
In other recent news, Lexeo Therapeutics reported a fourth-quarter loss of $0.78 per share, which was $0.06 below analyst estimates of a $0.72 loss. Despite this, the company shared positive interim data from its clinical trials, capturing investor interest. Lexeo’s LX2020 HEROIC-PKP2 Phase 1/2 trial revealed significant increases in PKP2 protein expression and a notable reduction in premature ventricular contractions in participants. Additionally, Lexeo announced regulatory progress for its LX2006 program, reaching an agreement with the FDA on using frataxin expression as an endpoint. The company completed enrollment for cohort 2 in the LX2020 trial and plans to release further data in the second half of 2025. Lexeo ended 2024 with $128.5 million in cash and investments, projecting this will support operations into 2027. Research and development expenses for the fourth quarter of 2024 rose to $18.4 million from $8.2 million in the same period the previous year.
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