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On Friday, Stifel analysts adjusted their outlook on ALX Oncology (NASDAQ:ALXO), reducing the price target to $1.50 from the previous $3.00 while maintaining a Hold rating on the stock. Currently trading at $1.24 with a market capitalization of $65.4 million, the company’s shares have declined over 90% in the past year. The firm’s analyst, Bradley Canino, provided insights into the decision, citing concerns over the company’s development strategies and regulatory risks.According to InvestingPro, ALX Oncology shows mixed financial signals, with 10+ additional real-time insights available to subscribers.
ALX Oncology recently announced a shift in its mid-stage development of evorpacept (CD47), focusing on potentially more promising tumor types such as breast and colorectal cancer (CRC). While the company maintains a strong liquidity position with a current ratio of 4.82 and more cash than debt on its balance sheet, the analyst pointed out that the changes might not be sufficient to create an appealing near-term investment case for the stock. The perceived high risk of the U.S. Food and Drug Administration (FDA) rejecting accelerated approval for gastric and head and neck squamous cell carcinoma (HNSCC) treatments was a significant factor in the revised assessment.
The firm also noted that meaningful data from interim phase 2 trials for breast and CRC are not expected until 2026. Stifel suggests that a re-rating of ALX Oncology’s stock might occur in the future if the company can provide additional randomized breast cancer data or demonstrate a significant single-arm CRC objective response rate (ORR) that exceeds historical benchmarks by more than 10 percentage points.
The updated Stifel model takes into account the company’s quarterly performance, restructuring efforts, and revised cash guidance extending to the fourth quarter of 2026. However, the firm has diminished its confidence in the company’s gastric cancer prospects and is awaiting proof of concept (PoC) data in additional tumor type regimens before reassessing the situation. Canino’s statement concluded with a cautious stance on recommending ALX Oncology as an investment, given the ongoing changes and unresolved issues in the near term.
In other recent news, ALX Oncology has announced a significant workforce reduction of approximately 30% as part of a strategic reorganization to prioritize its product pipeline and conserve cash. This reorganization also includes the departure of President and Chief Scientific Officer Dr. Jaume Pons. In terms of financial analysis, Jefferies has upgraded ALX Oncology’s stock from Hold to Buy, raising the price target to $3.00, citing a favorable risk/reward balance and potential upside from ongoing clinical trials. UBS, however, has adjusted its price target for ALX Oncology to $2.20 while maintaining a Buy rating, following mixed results from the ASPEN-06 study presented at the ASCO-GI conference. Stifel has maintained a Hold rating with a $3.00 target, noting the promising outcomes of evorpacept in combination therapy for HER2+ gastric cancer. Meanwhile, Cantor Fitzgerald has kept an Overweight rating, highlighting positive Phase 2 ASPEN-6 study results for evorpacept, which could enhance investor confidence in the company’s approach to cancer treatment. These developments reflect the ongoing adjustments and strategic decisions within ALX Oncology as it navigates the complex landscape of the pharmaceutical industry.
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