Bullish indicating open at $55-$60, IPO prices at $37
On Tuesday, Oppenheimer analysts adjusted their outlook on Viking Therapeutics (NASDAQ:VKTX), reducing the stock’s price target from $164.00 to $100.00, while maintaining an Outperform rating. The revision comes as Viking Therapeutics’ shares have seen a significant decline over the past year, underperforming compared to the broader Nasdaq Biotechnology Index (NBI). According to InvestingPro data, the company’s stock currently trades at $25.48, with analyst targets ranging from $30 to $164, suggesting significant potential upside despite recent challenges. The company’s financial health score stands at FAIR, based on comprehensive analysis of multiple factors.
The analysts noted that despite Viking’s clinical advancements, particularly with VK2735, its subcutaneous and oral treatment options for obesity, the company’s stock has fallen by 61% over the past year, in stark contrast to the NBI’s 2% dip. InvestingPro data confirms this decline, showing a -61.76% six-month return and revealing that the stock is currently trading 69% below its 52-week high of $81.86. This underperformance is attributed to changing dynamics in the obesity treatment market, which have been deemed unfavorable for Viking Therapeutics.
Investor sentiment has been influenced by a shift in the industry away from outright acquisitions to risk-sharing partnerships, an increase in deals for treatments with new mechanisms or small molecules, and a rise in innovation and cost-effective solutions originating from China. Additionally, there is a preference for earlier-stage deals that allow for more control over product development, and a perception that potential large acquirers are currently content with their existing obesity portfolios.
Oppenheimer’s analysis suggests that Viking Therapeutics could potentially sign a partnership deal or might proceed to bring its products to market independently. The new price target of $100.00 takes into account these market dynamics and the revisions made to their model.
The report concludes by acknowledging the challenging deal dynamics in the obesity space, which have been factored into the lowered price target for Viking Therapeutics. However, the Outperform rating indicates that Oppenheimer analysts still see potential in the company’s stock despite recent market trends and company performance. InvestingPro reveals that Viking maintains a strong balance sheet with more cash than debt, and its current ratio of 33.09 indicates robust liquidity. Investors should note that the company’s next earnings report is scheduled for April 23, 2025, which could provide crucial updates on its development pipeline and strategic direction.
In other recent news, Viking Therapeutics has been the focus of several key developments. H.C. Wainwright maintained its Buy rating for Viking Therapeutics, setting a price target of $102.00, following the completion of enrollment for the Phase 2 VENTURE-Oral trial of VK2735, which targets obesity and related conditions. The trial aims to evaluate the safety and efficacy of VK2735, with results anticipated to strengthen its competitive position. Meanwhile, Goldman Sachs initiated coverage on Viking Therapeutics with a Neutral rating and a $30.00 price target, citing the competitive challenges in the obesity treatment market as a potential hurdle for the company.
Additionally, Viking Therapeutics shares rose significantly after Pfizer (NYSE:PFE) announced the discontinuation of its obesity drug candidate, danuglipron, due to safety concerns. This move by Pfizer may reduce competition in the GLP-1 receptor agonist space, potentially benefiting Viking Therapeutics and other companies like Eli Lilly (NYSE:LLY) and Novo Nordisk (NYSE:NVO). Truist Securities highlighted the growth potential in the obesity treatment market, with a focus on Eli Lilly’s and Amgen (NASDAQ:AMGN)’s promising drug pipelines. These developments underscore the dynamic landscape in the obesity treatment sector, with Viking Therapeutics positioned amid evolving market opportunities and challenges.
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