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On Monday, Oppenheimer reaffirmed its positive stance on Avalo Therapeutics Inc. (NASDAQ: NASDAQ:AVTX), maintaining an Outperform rating and a $35.00 price target. Currently trading at $7.66 with a market cap of $80.15 million, InvestingPro analysis suggests the stock is undervalued. The firm’s confidence in Avalo is bolstered by the company’s recent financial report, which showed a significant increase in net cash, approximately $68 million, from warrant exercises in the last quarter. The ongoing patient enrollment for Avalo’s Phase 2 LOTUS trial of AVTX-009, which targets the treatment of hidradenitis suppurativa (HS), is proceeding as planned, with expectations to release top line data by 2026.
Avalo’s development pipeline could expand as the company anticipates announcing a second indication within the current year. The strategic hiring of a seasoned Chief Strategy Officer in January is seen as a positive move to strengthen the company’s leadership team. Oppenheimer’s analysis suggests that AVTX-009 has the potential to be a leading treatment due to its role as an anti-IL1β antibody.
The entry of AbbVie (NYSE:ABBV)’s lutikizumab, which is currently in Phase 3 for HS, into Phase 2 studies for Crohn’s Disease and atopic dermatitis was noted by Oppenheimer as a validation of the therapeutic prospects for this mechanism in the field of dermatology. Furthermore, Avalo’s current cash reserves are expected to fund operations into 2027, providing the company with a substantial financial runway. This is supported by InvestingPro data showing a strong current ratio of 19.96, indicating excellent liquidity position.
In a statement, Oppenheimer highlighted the strengths of AVTX-009 and its position in the market: "We believe -009 is a best-in-class anti-IL1β antibody, and we view AbbVie’s recent entry of lutikizumab into Phase 2 studies in Crohn’s Disease and atopic dermatitis as reinforcing this mechanism’s therapeutic prospects in dermatology. Cash resources should provide runway into 2027. Reiterate Outperform." Avalo’s stock rating and price target align with broader analyst consensus, with targets ranging from $18 to $48, suggesting significant potential upside from current levels.
In other recent news, Avalo Therapeutics Inc. has been the subject of a new analysis by Piper Sandler, which initiated coverage with an Overweight rating and set a price target of $48. The research firm highlighted the potential of Avalo’s leading drug candidate, AVTX-009, which is currently in clinical development for the treatment of hidradenitis suppurativa (HS), a chronic skin condition. Piper Sandler expressed a high probability of success for AVTX-009 due to its IL-1β mechanistic rationale and the large market opportunity for HS treatments. The firm’s analysis also noted that Avalo’s stock is trading at a discount compared to a key competitor in the HS market, which has a market cap of approximately $2.7 billion. The analysts emphasized the differentiated dosing schedules of AVTX-009, which could set it apart in the treatment landscape for HS. Avalo’s current market capitalization is approximately $70 million, and Piper Sandler’s positive outlook suggests room for significant growth from this valuation. These developments reflect a positive sentiment from Piper Sandler regarding Avalo Therapeutics’ future prospects.
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