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On Thursday, JMP Securities analyst Jonathan Wolleben increased the price target for Madrigal Pharmaceuticals (NASDAQ:MDGL) to $443 from the previous $427, while maintaining a Market Outperform rating on the stock. Currently trading at $355.88, InvestingPro analysis suggests the stock is slightly overvalued. The adjustment follows the release of new 2-year data on cirrhotic patients treated with Madrigal’s Rezdiffra, demonstrating a significant reduction in liver stiffness—a key indicator of improved liver health.
Shares of Madrigal Pharmaceuticals soared 19% intraday Thursday in response to the promising data, which showed a greater reduction in liver stiffness than competitor Akero’s FGF21 analog efruxifermin. The stock has demonstrated strong momentum, with a 48% return over the past year and is now approaching its 52-week high of $377.46. Wolleben noted that the new data places Rezdiffra at the forefront of treatment options for NASH patients with the highest unmet medical needs.
Despite the open-label nature of the study and the lack of a control arm, the analyst pointed out that the Rezdiffra trial involved a fairly large sample size. The improvement in liver stiffness is closely linked to decreased liver-related health issues, suggesting a positive outlook for the drug’s efficacy.
The Phase 3 MAESTRO-NASH Outcomes trial for Rezdiffra is expected to yield results in 2027. Success in this trial could lead to a transition from accelerated to full approval for treating non-cirrhotic conditions and potentially support approval for use in cirrhotic patients. With a market capitalization of $7.76 billion and an impressive gross profit margin of 96.5%, Madrigal shows strong commercial potential. Wolleben highlighted that the cirrhotic population represents additional value not yet accounted for in current valuations, with Madrigal estimating that 10-15% of NASH patients will be compensated cirrhotics by 2030. This suggests a new U.S. total addressable market (TAM) of $7 billion to $11 billion for Madrigal.
The analyst also commented that consensus revenue estimates for 2025, which stand at $511 million, seem considerably underestimated. This assessment is based on the number of patients projected to be on Rezdiffra by the end of 2024, even when assuming a very conservative decline in patient growth rate. InvestingPro data shows analyst targets ranging from $154 to $544, with a consensus recommendation of 1.69 (Strong Buy). The positive trial results and the potential market expansion have contributed to a more optimistic outlook on Madrigal’s stock performance. For deeper insights into MDGL’s valuation and growth prospects, access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Madrigal Pharmaceuticals announced its fourth-quarter and full-year 2024 financial results, reporting revenues of $103 million for the quarter and $180 million for the year, both at the high end of their preannounced range. The company’s earnings per share (EPS) for the quarter was ($2.71), which exceeded analyst estimates by $1.77, as consensus expectations were set at ($4.48). Citi analyst David Lebowitz raised the price target for Madrigal to $469, citing strong sales of Rezdiffra, which has consistently outperformed market expectations since its launch in the second quarter of 2024. TD Cowen maintained a $390 price target, with analyst Ritu Baral reiterating a Buy rating.
Madrigal has also shared promising two-year data from its MAESTRO-NAFLD-1 trial, showing a 6.7 kPa reduction in liver stiffness among patients with compensated cirrhosis due to non-alcoholic steatohepatitis (NASH). This study suggests potential benefits for patients and supports ongoing trials, including the MAESTRO-NASH OUTCOMES trial, with results expected in 2027. Additionally, the company is preparing for a European launch of Rezdiffra, pending regulatory approval, starting in Germany in the second half of 2025. Madrigal’s cash position at the end of 2024 was reported at $931.3 million, reflecting a strong financial foundation for future endeavors.
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