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On Thursday, Truist Securities revised its position on Cargo Therapeutics (NASDAQ:CRGX), currently trading at $13.19 with a market capitalization of $607 million, downgrading the biotechnology company’s stock rating from Buy to Hold. The firm also significantly reduced the price target from the previous $32.00 to $7.00. According to InvestingPro data, analyst targets for CRGX range widely from $3 to $33, reflecting significant uncertainty in the market. The adjustment came in response to recent developments regarding Cargo Therapeutics’ candidate Firi-cel.
The Truist Securities analyst expressed disappointment with the latest announcement from Cargo Therapeutics concerning the Phase 2 FIRCE-1 study of Firi-cel, which showed a stark contrast to the promising results of the earlier Phase 1 trials. According to the analyst, the outcome was unexpected and diverged from the initially impressive data.
In the statement, the analyst conveyed support for the management team’s potential to turn around the company’s fortunes. However, they noted that Cargo Therapeutics would require time to produce new data with its forthcoming asset, CRG-023. During this period, the analyst anticipates that the stock may experience limited movement.
The revised price target of $7.00 is justified by the analyst as being close to the company’s cash value, which is estimated at $8.00 per share. This new valuation reflects the analyst’s tempered expectations for Cargo Therapeutics’ short-term performance in the stock market following the recent clinical study results. InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 18.95 and holds more cash than debt, though it’s currently burning through cash rapidly. Get access to 8 more key financial insights and real-time Fair Value calculations with InvestingPro.
In other recent news, Cargo Therapeutics has experienced several significant developments. The company halted its Phase II FIRCE-1 clinical study for large B-cell lymphoma due to an unfavorable benefit-risk profile of its drug candidate, firi-cel. This decision led to several analyst firms, including JPMorgan, Jefferies, Piper Sandler, and Chardan Capital Markets, downgrading the company’s stock rating.
The discontinuation of the FIRCE-1 trial also prompted Cargo Therapeutics to reduce its workforce by approximately 50% to conserve cash. Despite these setbacks, the company plans to continue developing its other treatments, such as the preclinical trispecific program CRG-023.
Cargo Therapeutics has secured approximately $110 million from a private investment for further development of CRG-023. The company reported preliminary cash and equivalents of $368.1 million, which is expected to fund operations into mid-2028. Lastly, Cargo Therapeutics announced the appointment of Dr. Kapil Dhingra to its Board of Directors and entered a sublease agreement with Vaxcyte, Inc. These are the recent developments concerning Cargo Therapeutics.
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