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On Tuesday, Rhythm Pharmaceuticals (NASDAQ:RYTM), currently trading at $54.96 with a market capitalization of $3.47 billion, continues to be in focus after Oppenheimer analysts reiterated their Outperform rating and a $76.00 price target on the stock. According to InvestingPro data, analyst targets for the stock range from $63 to $94, suggesting significant upside potential. The affirmation follows a recent discussion with Dr. Brian DeBosch, an expert in the field, regarding the company's positive Phase 3 hypothalamic obesity (HO) trial results announced on Monday.
The conversation with Dr. DeBosch has bolstered Oppenheimer's confidence in Rhythm Pharmaceuticals' potential. The firm projects that the drug setmelanotide could achieve peak worldwide sales exceeding $1.5 billion in the HO indication alone. This optimism is supported by the company's impressive 68.06% revenue growth and strong gross profit margins of 89.73% in the last twelve months. According to the analyst, setmelanotide's impressive efficacy could establish it as the standard-of-care for HO. Furthermore, Dr. DeBosch now considers his initial estimate that 75% of his patients would use the drug to be a conservative figure.
Additionally, the expert expressed his view that the serious adverse event (SAE) linked to the drug is likely incidental, which may further support its safety profile. With these insights, Oppenheimer sees Rhythm Pharmaceuticals as well-positioned ahead of a projected mid-2026 launch in the United States. The firm anticipates a rapid market penetration similar to that of SLNO, which is transitioning to commercial stages.
Despite the positive data and the subsequent endorsement from Oppenheimer, Rhythm Pharmaceuticals' stock appreciation has been modest, though the stock has gained 9.92% in the past week. Analysts suggest that the restrained investor response could be attributed to the current broader market volatility, reflected in the stock's high beta of 2.32. Nonetheless, Oppenheimer recommends investors to take advantage of the current share price levels in anticipation of potential future gains as the company progresses toward the commercialization of its product. For deeper insights into RYTM's valuation and growth prospects, investors can access comprehensive analysis through InvestingPro, which offers exclusive financial metrics and 12 additional ProTips for this stock.
In other recent news, Rhythm Pharmaceuticals has reported promising results from its Phase 3 TRANSCEND trial for setmelanotide, targeting acquired hypothalamic obesity. The trial demonstrated a significant reduction in body mass index, with a 19.8% placebo-adjusted reduction, marking a potential breakthrough for patients with this condition. Rhythm Pharmaceuticals plans to submit a supplemental New Drug Application to the FDA in the third quarter of 2025, aiming for priority review due to the drug's Breakthrough Therapy Designation status.
Analyst firms have responded positively to these developments. BofA Securities upgraded Rhythm Pharmaceuticals' stock rating to Buy, raising the price target to $63, while Stifel maintained a Buy rating with a target of $78, citing exceptional trial results. Citizens JMP reiterated a Market Outperform rating with an $81 price target, supported by a risk-adjusted analysis. The analysts see setmelanotide as a potential blockbuster opportunity, with a fast market penetration expected.
No new safety signals were observed during the trial, with setmelanotide generally well-tolerated. The company's next steps include presenting full data from the TRANSCEND study at a medical meeting and completing an additional cohort of Japanese patients, with topline data expected in early 2026. Analysts emphasize the high demand for effective treatments in this area, given the lack of approved therapies for acquired hypothalamic obesity.
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