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On Friday, Wells Fargo (NYSE:WFC) initiated coverage on Merus N.V. (NASDAQ:MRUS), currently trading at $41.54 with a market capitalization of $2.84 billion, with an Overweight rating and a price target of $91.00. The firm’s analyst, Eva Fortea Verdejo, highlighted the untapped potential of Merus’ product candidate, peto, in metastatic colorectal cancer (mCRC) as a key opportunity for the company. According to InvestingPro data, analysts maintain a Strong Buy consensus on the stock, with price targets ranging from $67 to $109.
Despite shares of Merus declining by 2% year-to-date, compared to a 4% increase in the XBI biotechnology index, Verdejo believes the market has not fully recognized the value of peto’s prospects in mCRC. The analyst pointed out that while peto’s application in head and neck squamous cell carcinoma (HNSCC) is acknowledged, its potential in mCRC represents an additional growth avenue that is not yet factored into the stock’s valuation. InvestingPro analysis reveals the company holds more cash than debt and maintains strong liquidity, with current assets exceeding short-term obligations by over 8 times.
Verdejo commented on the favorable outlook for Merus over the next year, anticipating that forthcoming data on peto in combination with pembrolizumab for first-line HNSCC treatment will bolster investor confidence in its broader applications. Additionally, initial results in mCRC are expected to potentially open up a new market for the company.
Merus, a clinical-stage oncology company, is developing innovative, full-length human bispecific antibody therapeutics. The analyst’s positive outlook is based on the upcoming milestones that could validate peto’s efficacy and market potential in multiple cancer indications.
The Overweight rating and $91.00 price target set by Wells Fargo suggest a bullish stance on Merus stock, reflecting confidence in the company’s pipeline and its ability to capitalize on unmet needs in the oncology market. Investors should note that Merus is scheduled to report its next earnings on March 4, 2025. For deeper insights into Merus’s financial health and growth prospects, InvestingPro subscribers can access the comprehensive Pro Research Report, which includes detailed analysis of the company’s valuation metrics and growth potential.
In other recent news, clinical-stage oncology company, Merus N.V., has been in the spotlight with a series of significant developments. Earnings and revenue results were influenced by Merus’s strategic licensing agreement with Partner Therapeutics, Inc., which granted exclusive rights for the development and commercialization of zenocutuzumab, a drug aimed at treating NRG1+ cancer in the United States. Merus will receive an upfront payment and is eligible for up to $130 million in milestone payments based on annual net sales.
The U.S. Food and Drug Administration (FDA) also recently approved BIZENGRI® (zenocutuzumab-zbco) for the treatment of adult patients with pancreatic adenocarcinoma and non-small cell lung cancer that are advanced, unresectable or metastatic and harbor a neuregulin 1 (NRG1) gene fusion. This approval marks a milestone for Merus’s proprietary Biclonics® technology platform.
On the analyst front, Citi maintained a Buy rating on Merus and increased the price target to $97 from $89 following positive trial data on petosemtamab monotherapy. Guggenheim also maintained a Buy rating but lowered the stock’s price target to $109 from $111 after the announcement of the PTx deal. Meanwhile, BMO Capital Markets sustained its positive stance on Merus, maintaining an Outperform rating with a steady price target of $95.00. These assessments reflect recent developments and the potential of Merus’s products in the oncology sector.
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