Stifel cuts Cabaletta Bio stock target to $13, maintains buy

On Monday, Stifel analysts adjusted their outlook on Cabaletta Bio Inc . (NASDAQ:CABA) by reducing the stock’s price target to $13 from the previous $26, while continuing to endorse the stock with a Buy rating. The stock, which has declined nearly 91% over the past year and is currently trading near its 52-week low of $1.45, appears undervalued according to InvestingPro analysis. Despite the challenging market conditions, the company maintains a strong liquidity position with a current ratio of 8.11. The revision follows the company’s earnings report and the disclosure of a new case of high-grade ICANS, which is expected to intensify discussions about the safety of CAR-T therapies in autoimmune diseases (AID). InvestingPro data reveals that seven analysts have recently revised their earnings expectations downward, with the company’s net income expected to decline this year. For deeper insights into CABA’s financial health and future prospects, subscribers can access the comprehensive Pro Research Report, along with 14 additional ProTips.

Cabaletta Bio’s recent findings have shown signs of efficacy in their treatments, but they also underscore the risks associated with CAR-T therapies, including high-grade Cytokine Release Syndrome (CRS) and Immune Effector Cell-Associated Neurotoxicity Syndrome (ICANS). Management at Cabaletta believes that some of these risks could be mitigated by postponing the administration of CAR-T in patients who are showing signs of fever or infection and have high levels of inflammation.

The Stifel analysts noted that while these mitigation strategies are not insurmountable, they do introduce additional complexity to the treatment process. This could potentially restrict the use of the therapy and slow down its commercial adoption. In light of these concerns, Stifel has revised its utilization estimates for Cabaletta’s lead candidate, rese-cel, across various indications. The company’s financial metrics reflect these challenges, with an EBITDA of -$112.92 million in the last twelve months and a rapid cash burn rate that investors should monitor closely.

The new price target reflects increased development risks and a reduced probability of success, now estimated at 25%. Despite the lowered target price, Stifel remains optimistic about Cabaletta Bio’s potential. The analysts believe that the insights gained from phase 1 trials can be leveraged to improve patient selection and reduce toxicity, supporting the continued Buy rating on the stock. Current analyst consensus shows strong optimism, with price targets ranging from $6 to $30, significantly above the current trading price of $1.38.

In other recent news, Cabaletta Bio Inc. has received a reaffirmed Buy rating from H.C. Wainwright, with a price target set at $25.00. This follows updates on the company’s progress in patient enrollment for its RESET trials, which focus on the drug resecabtagene autoleucel, also known as rese-cel. By the end of 2024, Cabaletta Bio successfully enrolled 21 patients across 44 clinical sites in the United States and Europe, a notable increase from the previous count of 16 patients in November 2024. The firm highlighted the acceleration in patient enrollment, which positions the company to begin dosing one patient per week over the coming months. This development suggests that Cabaletta Bio could have data on nearly 50 patients by the time of the American College of Rheumatology meeting in November. The company’s management has previously noted the strategic advantage of having a large number of active clinical sites. Recent enrollment progress indicates that Cabaletta Bio might soon stand out in its field. The maintained Buy rating and price target from H.C. Wainwright reflect confidence in the company’s current trajectory and the potential impact of these advancements.

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