Stifel maintains RYTM stock Buy rating, $78 target on ph3 data

On Monday, Stifel analysts remained positive on Rhythm Pharmaceuticals (NASDAQ:RYTM), maintaining a Buy rating and a price target of $78.00. Currently trading at $46.95, the stock has garnered strong analyst support, with a consensus rating of 1.5 (Strong Buy) and price targets ranging from $60 to $94, according to InvestingPro data. The firm’s endorsement follows the release of encouraging Phase 3 trial results for setmelanotide, a treatment for Hypothalamic Obesity. According to Stifel, the drug demonstrated approximately a 20% placebo-adjusted Body Mass Index (BMI) reduction, which they consider exceptional for a patient group that is typically hard to treat.

The analysts noted that the results exceeded Wall Street expectations, with a 17% reduction in BMI attributed to the drug and a 3% reduction due to placebo effects. Under normal market conditions, they anticipated that Rhythm Pharmaceuticals’ shares would likely see a significant increase in value due to these positive outcomes. The stock has indeed shown significant volatility, with InvestingPro data showing a -11.36% decline over the past week, though maintaining a positive 15.81% return over the past year.

Looking forward, Stifel analysts see the recent data as reducing the risk associated with the approval of setmelanotide for Hypothalamic Obesity. They also project that the condition could present a blockbuster opportunity for Rhythm Pharmaceuticals, with a potential for quick market penetration as indicated by key opinion leaders (KOLs). The company’s impressive 89.73% gross profit margin and strong revenue growth of 68.06% in the last twelve months support this optimistic outlook.

In addition to the current findings, Stifel is anticipating data in the second half of 2025 for bivamelagon, the company’s next-generation oral medication. This upcoming data could potentially extend the intellectual property of the setmelanotide franchise by around ten years.

Stifel concluded by highlighting the attractiveness of Rhythm Pharmaceuticals as a relatively safer small to mid-size investment (SMID) in a challenging market environment, while also recognizing that no investment is entirely without risk. Based on InvestingPro’s Fair Value analysis, the stock appears overvalued at current levels. Investors seeking deeper insights can access the comprehensive Pro Research Report, which provides detailed analysis of RYTM’s financial health, market position, and growth prospects among 1,400+ top US stocks.

In other recent news, Rhythm Pharmaceuticals has announced positive results from its Phase 3 TRANSCEND trial, which evaluated the efficacy of setmelanotide in treating acquired hypothalamic obesity. The trial met its primary endpoint with a significant reduction in body mass index (BMI) for patients receiving the therapy, showing a -19.8% placebo-adjusted BMI reduction. Stifel analyst Paul Matteis reiterated a Buy rating for Rhythm Pharmaceuticals, emphasizing the potential for setmelanotide to be a blockbuster drug. Additionally, H.C. Wainwright reaffirmed its Buy rating with a $70 price target, highlighting the recent orphan drug designation from Japan’s Ministry of Health for setmelanotide.

Rhythm Pharmaceuticals has also regained rights to its obesity drug, IMCIVREE® (setmelanotide), in mainland China, Hong Kong, and Macau, following the termination of a licensing agreement with RareStone Group Ltd. Citizens JMP maintained its Market Outperform rating and $81 price target for Rhythm Pharmaceuticals, citing optimism from endocrinologist Dr. Lewis (JO:LEWJ) Blevins regarding the drug’s potential. The company plans to submit a supplemental New Drug Application to the FDA and a Type II variation request to the European Medicines Agency in the third quarter of 2025. No new safety signals were observed during the trial, and the drug was generally well-tolerated.

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