Stifel maintains Buy rating and $11 target on Compass Pathways stock

On Friday, Stifel analysts maintained their Buy rating on Compass Pathways (NASDAQ:CMPS) shares, with a steady price target of $11.00, representing significant upside from the current price of $2.70. According to InvestingPro data, analyst targets range from $11 to $45, suggesting substantial potential upside for this $250 million market cap company. The affirmation follows a recent meeting with Compass Pathways' senior management, which included Chief Product Officer Dr. Steve Levine, Chief Commercial Officer Lori Englebert, Chief Financial Officer Teri Loxam, and Vice President of Investor Relations Steve Schultz.

During the discussion, Stifel analysts focused on three critical topics for the company's stock: the anticipated outcomes of the '005 study, regulatory aspects of their phase 3 program, and preparations for commercialization. The '005 study top-line readout is particularly significant, as it will provide insights into the effectiveness of Compass's therapies. InvestingPro analysis reveals the company maintains a strong liquidity position with a current ratio of 5.92 and holds more cash than debt on its balance sheet, providing financial flexibility for its clinical programs.

The analysts noted that Compass Pathways is confident in the robustness of their phase 3 program, which has been designed to address key considerations from the U.S. Food and Drug Administration (FDA). This confidence is expected to play a crucial role in the regulatory approval process for the company's psychedelic treatments.

Furthermore, Stifel highlighted Compass's commercial strategy, which includes lessons learned from the launch of Spravato, a nasal spray for treatment-resistant depression. The firm believes that Spravato has not only validated the market potential for such treatments, with revenues exceeding $1 billion, but also set a precedent for regulatory and commercial pathways that companies like Compass Pathways can follow.

Compass Pathways' stock is perceived by Stifel as being significantly undervalued due to investor skepticism about the future of psychedelics in central nervous system (CNS) treatments. This view comes amid a challenging period for the stock, which has declined 70.59% over the past year according to InvestingPro data. Despite the recent performance, Stifel's analysts remain optimistic, viewing the success of Spravato as a market validation and a foundation for the acceptance of psychedelics as a new and relevant therapeutic class in CNS disorders. For deeper insights into CMPS's valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

In other recent news, Compass Pathways has been making strides in the development and potential commercialization of its psilocybin therapy, COMP360. Cantor Fitzgerald has maintained an Overweight rating on the company, citing the publication of new procedural codes that could enhance reimbursement processes for the therapy. The company is actively preparing for commercialization by forming partnerships with healthcare providers and focusing on coverage plans that align with FDA guidelines. Meanwhile, H.C. Wainwright reaffirmed a Buy rating with a $45 price target, highlighting the potential of COMP360 in treating treatment-resistant depression and its planned expansion into post-traumatic stress disorder research.

Compass Pathways recently secured $140 million in financing, expected to support its operations into 2026, enabling further research and development. Analysts from H.C. Wainwright believe that COMP360 could become a significant treatment option if approved, noting its potential efficacy and scalability. Separately, Compass Therapeutics reported progress in its oncology pipeline, despite missing Q4 earnings estimates. The company posted a Q4 adjusted loss per share of -$0.11 and did not report any revenue for the quarter, with a full-year net loss of $49.4 million.

Compass Therapeutics highlighted ongoing advancements in their lead candidate, tovecimig, with key data expected by the end of Q1 2025. The company concluded 2024 with $127 million in cash and marketable securities, anticipating that this will fund operations into Q1 2027. Compass Therapeutics is also planning new clinical trials for its drug candidates, aiming to target specific patient populations with novel biomarkers.

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