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On Wednesday, Scotiabank (TSX:BNS) began coverage on Arcturus Therapeutics (NASDAQ:ARCT), assigning a Sector Outperform rating and setting a price target of $32.00. Currently trading at $11.77, the stock sits well below analyst targets ranging from $44 to $140. The firm’s analysis suggests that the biotech company’s shares are currently trading near cash value but possess significant upside potential due to its promising therapeutics pipeline. According to InvestingPro analysis, the stock appears to be undervalued at current levels.
Arcturus is focusing its efforts on developing treatments for cystic fibrosis (CF) and ornithine transcarbamylase (OTC) deficiency, leveraging its proprietary LUNAR and STARR technologies. With a beta of 2.37, the stock has shown significant volatility, which is typical for early-stage biotech companies. Scotiabank’s positive outlook is partly based on the potential for Arcturus to gain an edge in the CF market, especially after a recent clinical hold on a competing drug, VX-522, developed by Vertex Pharmaceuticals (NASDAQ:VRTX).
The analyst at Scotiabank acknowledges the early stage of development for both the CF and OTC programs, estimating a 25% probability of success for each. However, they point out that even successful development in one of these programs could lead to significant returns, as detailed in their net present value (NPV) sensitivity analysis.
The pivot to a focus on therapeutics has been seen as a strategic move for Arcturus, extending its cash runway into 2028. InvestingPro data shows the company maintains strong liquidity with a current ratio of 5.64 and holds more cash than debt on its balance sheet. The analyst also notes that future royalties from the COVID-19 treatment Kostaive are expected to contribute to funding Arcturus’s clinical development, further supporting the company’s financial stability.
In conclusion, Scotiabank’s initiation of coverage on Arcturus Therapeutics comes with a strong vote of confidence in the company’s potential to deliver value from its therapeutic pipeline, particularly in light of recent developments in the CF treatment landscape. For deeper insights into Arcturus’s financial health and growth prospects, including 8 additional ProTips and comprehensive analysis, check out the full research report available on InvestingPro.
In other recent news, Arcturus Therapeutics reported a significant earnings miss for the first quarter of 2025. The company revealed a net loss of $0.52 per share, falling short of the anticipated profit of $3.59 per share. Revenue also declined sharply to $29.4 million, missing the forecasted $205.21 million. Despite these setbacks, Cantor Fitzgerald maintained an Overweight rating on Arcturus shares, indicating potential outperformance in the future. Canaccord Genuity adjusted its price target to $66 while maintaining a Buy rating, reflecting continued confidence in the company’s strategic focus on cystic fibrosis and OTC deficiency programs. Citi also reiterated its Buy rating with a $44 target, highlighting the company’s decision to halt certain early-stage vaccine programs to concentrate on more promising treatments. Arcturus has extended its cash runway to early 2028, focusing investments on advancing its mRNA therapeutics pipeline. Upcoming clinical data, particularly from cystic fibrosis and OTC deficiency trials, are expected to be pivotal for the company.
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