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On Friday, Oppenheimer analyst Jay Olson upgraded Nektar Therapeutics (NASDAQ:NKTR) stock rating to Outperform from Perform, setting a price target of $6.00. Olson’s decision is based on a refreshed model in anticipation of the upcoming Phase 2b readout for rezpeg in June. The analyst’s positive outlook stems from the belief that Nektar Therapeutics presents a favorable risk/benefit profile, especially as the company’s stock is currently trading at negative enterprise value (EV) and at a significant discount when compared to its peers with Phase 2 atopic dermatitis (AD) assets. According to InvestingPro data, analyst consensus shows a moderate buy recommendation, with price targets ranging from $1 to $7, suggesting significant upside potential. The stock is currently trading at a low revenue multiple, indicating possible undervaluation.
Olson acknowledged the inherent risks associated with AD trials, particularly given rezpeg’s inconsistent history. However, he noted that the Phase 1b AD data appear promising. The analyst suggested that rezpeg’s unique profile has the potential to provide meaningful benefits within a growing market. Olson also pointed out that recent setbacks in the AD pipeline and rezpeg’s distinctive mechanism could set a lower threshold for success in the Phase 2 results. InvestingPro analysis reveals that while the company is quickly burning through cash, it maintains a strong current ratio of 4.26 and holds more cash than debt on its balance sheet, providing financial flexibility during this critical trial phase.
The upgrade comes with a reassessment of Nektar’s potential, factoring in additional opportunities for rezpeg in addressing alopecia areata (AA) and Type 1 diabetes (T1D), which could offer incremental benefits. Olson’s revised model incorporates these potential opportunities, which contribute to the analyst’s optimistic stance on the stock.
Nektar Therapeutics is preparing for the Phase 2b readout of rezpeg, which is a significant upcoming milestone for the company. The analyst’s upgrade reflects a positive anticipation of the trial’s outcome and a belief in the drug’s potential to make an impact in the treatment of atopic dermatitis and possibly other conditions. The new price target of $6.00 represents Oppenheimer’s confidence in the stock’s growth prospects.
In other recent news, Nektar Therapeutics reported its Q4 2024 earnings, exceeding expectations with an earnings per share (EPS) of $0.03, compared to the anticipated loss of $0.16. However, the company’s revenue was slightly below expectations, coming in at $29.2 million against a forecast of $29.81 million. Looking ahead, Nektar projects its 2025 revenue to be between $40 million and $50 million. In terms of financial stability, the company ended 2024 with $269.1 million in cash and equivalents, which is expected to support operations through the fourth quarter of 2026.
Additionally, Nektar is advancing its clinical programs, with results from the Phase 2b trial of REZPEG for atopic dermatitis expected in the second quarter of 2025 and for alopecia areata in the fourth quarter of 2025. The company is also planning a Phase 2 trial for Type 1 diabetes in collaboration with TrialNet, which will cover most of the trial costs. Analyst firms have varied opinions on Nektar’s stock, with BTIG maintaining a Neutral rating and a $4.00 price target, while Jefferies reduced its price target to $1.00 but kept a Hold rating. Both firms noted the importance of upcoming trial results for REZPEG as pivotal to Nektar’s future.
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