Zealand Pharma stock jumps after Goldman Sachs raises its price target

On Friday, Goldman Sachs updated its price target for Zealand Pharma A/S (NASDAQ:ZEAL:DC) (NASDAQ: ZEAL), increasing it to DKK1,106.00 from the previous DKK1,013.00. The firm maintained its Conviction Buy rating on the stock. The adjustment comes in light of recent developments in the company's drug pipeline, particularly focusing on the obesity treatment sector.

The pharmaceutical company's second-quarter results were less about financials and more centered on the progress of its product pipeline, according to the investment bank. Goldman Sachs highlighted the unchanged timelines for Zealand Pharma's obesity-related treatments and the addition of a new cohort in the Phase 1b trial of dapiglutide. This trial is now testing doses up to 26mg over 28 weeks.

Zealand Pharma's management has expressed continued confidence in petrelintide, considered a key asset in the company's pipeline. The drug is anticipated to have a best-in-class profile, with competitor data expected to be released before the end of the year. Moreover, the company's strategy for Phase 2b trials of petrelintide is reported to be proceeding as planned, with initiation expected in the second half of 2024.

The investment firm's positive outlook is based on what it sees as a series of significant events for Zealand Pharma in the latter half of 2024.

Zealand Pharma has expanded its equity offering to $1 billion due to strong investor demand, up from the previously planned $900 million. The offering involves the issuance of new shares, with the funds raised intended to support the company's research and development activities, as well as its commercialization efforts for marketed products.

Zealand Pharma has also seen promising results from various trials, including the drug candidate survodutide, which demonstrated efficacy in improving liver health in a Phase 2 trial. Survodutide has been recognized by the U.S. Food and Drug Administration with Fast Track Designation for MASH and fibrosis treatment.

Zealand Pharma's investigational drug, dapiglutide, demonstrated an average weight loss of up to 4.3% in a 12-week study.

Zealand Pharma received an Overweight rating from Cantor Fitzgerald and a Buy rating from BTIG, reflecting optimism about the company's potential in the obesity treatment market. The company is also working on two near-commercial rare disease therapies with little competition, which are expected to be highly successful and potentially reach $1.9 billion in combined peak sales.

InvestingPro Insights

As Zealand Pharma A/S (ZEAL:DC) (NASDAQ: ZEAL) navigates through its pivotal phase of drug development, particularly in the obesity treatment sector, the company's financial metrics and market performance offer valuable insights. With a market capitalization of approximately $9.97 billion, the company stands as a significant player in the biopharmaceutical industry. Despite a challenging P/E ratio, currently at -80.71, and an adjusted P/E ratio for the last twelve months as of Q2 2024 at -94.14, investors are showing optimism, reflected in the stock's robust year-to-date price total return of 151.47%.

One of the most striking figures is the company's revenue growth, which has surged by 301.39% over the last twelve months as of Q2 2024. This exceptional growth trajectory is further underscored by a quarterly revenue growth of 227.96% in Q2 2024. While these figures are promising, it's important to note the high Price/Book ratio of 7.08, which suggests a premium market valuation relative to the company's book value.

InvestingPro Tips highlight the stock's impressive 1-year price total return of 305.93%, indicating a strong performance relative to the market. Additionally, the stock is trading close to its 52-week high at 96.55% of that peak price. For investors seeking a deeper analysis, InvestingPro provides numerous additional tips, offering a comprehensive view of the company's potential and market position. As of the latest update, InvestingPro lists 5 more tips for investors considering Zealand Pharma.

The company's next earnings date is set for November 7, 2024, which will be a pivotal moment for investors to assess the company's financial health and progress on its drug pipeline. Meanwhile, the InvestingPro Fair Value estimate stands at $93.91, providing an analytical perspective on the stock's intrinsic value based on various metrics.

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