Truist cuts Keros Therapeutics stock target to $25, maintains Buy

On Wednesday, Truist Securities revised its price target for Keros Therapeutics (NASDAQ:KROS) shares, lowering it to $25 from the previous target of $43, while maintaining a Buy rating on the stock. The adjustment follows a comprehensive review by Truist Securities after a visit to the company's headquarters in Lexington, Massachusetts, and detailed discussions regarding Keros's product pipeline. The revised target still represents significant upside potential from the current price of $9.27, which sits near its 52-week low, down 84.7% over the past year.

The Truist Securities analyst highlighted several key points to support the ongoing Buy rating despite the reduced price target. The analyst pointed out that Keros Therapeutics is currently trading below its cash value, suggesting that the market is undervaluing the company, especially considering that the current price does not reflect the potential of its pipeline. InvestingPro data confirms this view, showing the company holds more cash than debt and maintains a strong current ratio of 21.45, indicating robust short-term liquidity. According to InvestingPro's Fair Value analysis, the stock appears undervalued at its current market cap of $377 million.

Despite acknowledging investor skepticism due to safety concerns, particularly after the recent challenges faced by Keros's Phase 2 Pulmonary Arterial Hypertension (PAH) program, Truist Securities expressed continued belief in the company's platform. The firm also noted a high level of confidence in the management's ability to execute on the pipeline. While InvestingPro data shows the company is currently unprofitable with an EBITDA of -$209.6 million, analyst targets ranging from $15 to $76 suggest significant potential upside. Get access to 8 more exclusive InvestingPro Tips and detailed financial metrics to make more informed investment decisions.

The report by Truist Securities also mentioned that Keros Therapeutics is well-capitalized, with sufficient funds to continue operations into 2029. The analyst anticipates that the company will manage its spending carefully. The firm views Keros as an attractive investment for those with a long-term perspective, especially given the current macroeconomic environment and the prevailing uncertainties in the biopharmaceutical sector.

In summary, Truist Securities reaffirmed its positive stance on Keros Therapeutics, signaling confidence in the company's management and long-term potential despite the recent setbacks and broader market challenges.

In other recent news, Keros Therapeutics has made headlines with several significant developments. The company recently announced a global license agreement with Takeda, which became effective following regulatory clearance. This partnership, focused on the advancement of Keros's therapeutic candidate elritercept, includes an upfront payment of $200 million from Takeda, providing Keros with a strong financial foundation for its clinical trials. Meanwhile, Keros voluntarily terminated its Phase 2 TROPOS study for cibotercept, a treatment for pulmonary arterial hypertension, due to safety concerns involving pericardial effusions. This led Oppenheimer to reduce its price target for Keros to $23, though the firm maintained an Outperform rating. Similarly, Piper Sandler cut its price target to $15, yet kept an Overweight rating, reflecting continued optimism despite the challenges. H.C. Wainwright also revised its price target to $40, citing the paused TROPOS study but maintained a Buy rating. Additionally, Cantor Fitzgerald downgraded Keros to Neutral, following the dosing halt in the cibotercept trial. As Keros navigates these developments, it is shifting focus towards advancing KER-065 for neuromuscular diseases, with upcoming data anticipated in early 2025.

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