Monday saw Roth/MKM initiate coverage on NASDAQ:GTBP stock with a favorable outlook, assigning a Buy rating and setting a price target of $11.00 for the $6.26 million market cap company, whose shares currently trade at $2.80.
The firm's assessment is based on a detailed Discounted Cash Flow (DCF) analysis, which incorporates a 25% discount rate on future cash flows and the terminal value. The terminal value itself is calculated using a 5x multiple of the projected 2033 operating income, which is estimated to be $113 million.
The analyst's optimism hinges on the potential revenue from GT Biopharma's GTB-3650, while also looking forward to initial clinical results from GTB-5550 and GTB-7550. The company's financial health appears stable, with a reported cash reserve of $6.5 million as of the end of the third quarter in 2024.
According to InvestingPro, the company maintains more cash than debt on its balance sheet, though analysts don't expect profitability this year. This financial cushion is expected to sustain the company's operations well into the second quarter of 2025, and the company is currently free of debt.
The Buy rating reflects confidence in GT Biopharma's pipeline and its financial strategy. The $11.00 price target suggests a substantial upside from the company's recent stock performance, indicating a positive outlook for investors.
Investors responded positively to the news, with shares of GT Biopharma experiencing an uptick following the coverage initiation. This financial analysis and the subsequent investor reaction underscore the market's reception of the company's strategic direction and its product development progress.
The stock's movement today is a direct result of Roth/MKM's coverage initiation, with the market reacting to the new price target and the insights into GT Biopharma's financial standing and future prospects.
While the stock has seen a -63.4% YTD return, InvestingPro analysis suggests the stock is currently undervalued, with additional insights and 5 more ProTips available to subscribers.
The company's no-debt status and cash position are likely contributing factors to the analyst's bullish stance.
In other recent news, GT Biopharma Inc. faces potential delisting from the Nasdaq Stock Market due to an equity shortfall.
The pharmaceutical company has until January 2025 to submit a plan to Nasdaq outlining how it will regain and maintain compliance with the equity requirements.
Amid these challenges, GT Biopharma has also made significant strides in its development of a new cancer treatment, GTB-3650. The company has entered a clinical trial agreement with the University of Minnesota, sponsoring a phase 1 clinical trial for this treatment.
In line with these developments, Dr. Jeffrey Miller, previously the Consulting Chief Medical (TASE:PMCN) Officer and Consulting Chief Scientific Officer, has transitioned to the role of Consulting Senior Medical Director at GT Biopharma. This role change aligns with a request from his primary employer, the University of Minnesota.
In addition, GT Biopharma has received clearance from the U.S. Food and Drug Administration for its Investigational New Drug application for GTB-3650, allowing the initiation of a Phase 1 clinical trial. Lastly, the company has initiated a registered direct offering and concurrent private placement, expecting to yield approximately $3.2 million in gross proceeds through the sale of 740,000 shares of common stock. These are the recent developments within GT Biopharma.
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