Oppenheimer raises Ovid stock rating, sets $4 price target

On Wednesday, Oppenheimer analyst Francois Brisebois upgraded Ovid Therapeutics Inc (NASDAQ:OVID) from Perform to Outperform, establishing a price target of $4.00. The upgrade comes as the stock trades near its 52-week low of $0.68, with InvestingPro data showing the shares have declined over 80% in the past year. Brisebois expressed renewed confidence in the company’s pipeline, particularly highlighting the potential of its OV329 program as a promising next-generation GABA-AT inhibitor.

The upgrade comes after a period of reassessment following Ovid Therapeutics’ setbacks with soticlestat. While the company’s financials show a strong current ratio of 5.66 and more cash than debt on its balance sheet, Brisebois and his team conducted an in-depth review of the company’s remaining pipeline before deciding to assign value to the OV329 program, citing its stage of development and the mechanism of action history as key factors in the decision.

Brisebois noted that OV329 has demonstrated potency more than 100 times greater than that of the first-generation GABA-AT inhibitor vigabatrin, which had peak sales of $330 million in the United States despite an ocular safety label. OV329 has been specifically designed to avoid ocular toxicity, which could represent a significant therapeutic advantage.

While the specific indication for OV329 has not yet been chosen, the analyst believes that developmental and epileptic encephalopathies (DEE), a group of conditions that involve the reduction of hyperexcitability, could be a reasonable target given the history of vigabatrin in this area.

Brisebois’ statement underlined the rationale behind the upgrade and new price target: "We are changing our rating to Outperform from Perform and setting a $4 PT." This adjustment reflects Oppenheimer’s optimism about the future prospects of Ovid Therapeutics’ drug development programs. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available including 12 more ProTips and comprehensive financial metrics for subscribers.

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