The reason Madrigal Pharmaceuticals' shares are decreasing today.
Madrigal Pharmaceuticals' shares were taking a nosedive, dropping an unpleasant 13.3% by 11:11 a.m. ET on a gloomy Monday. The reason for this downturn? The pharmaceutical giant's preliminary fourth-quarter and full-year 2024 results.
The company reported that its metabolic steatohepatitis (MASH) drug, Rezdiffra, had brought in preliminary Q4 net sales ranging between $100 million and $103 million. For the full year of 2024, the drug's net sales were projected to be between $177 million and $180 million. On top of that, Madrigal announced it would end 2024 with a substantial financial cushion – cash, cash equivalents, restricted cash, and marketable securities totalling around $931 million.
So, what didn't investors like about these results, you ask?
On the surface, there wasn't much to dislike. Madrigal had easily surpassed analysts' estimates, which polled by LSEG, were expecting Q4 revenues of $91.8 million and full-year revenues of $168.3 million. But here's the kicker: sometimes, Wall Street has aspirations that surpass even their own predictions. Madrigal failed to meet those lofty unofficial targets, causing the stock to plummet.
But is it worth buying Madrigal Pharmaceuticals stock after this dip?
It's essential to remember that Rezdiffra is still in its early stages in the U.S., only having received approval in March 2024. As the first FDA-approved treatment for MASH in the country, the drug promises a bright future. Madrigal is even preparing for a European launch in the second half of 2025 and anticipates positive results from an ongoing clinical trial evaluating Rezdiffra in compensated cirrhosis.
All in all, aggressive investors might want to consider snatching up Madrigal Pharmaceuticals stock during this pullback. The long-term prospects and revenue growth potential make it an intriguing buy.
Despite surpassing analysts' expectations for its Q4 and full-year 2024 revenues, Madrigal Pharmaceuticals fell short of Wall Street's lofty unofficial targets, leading to a decline in its stock price. To capitalize on this opportunity, aggressive investors may consider investing in Madrigal, as the company's early-stage drug, Rezdiffra, shows promising potential for future growth, particularly with its upcoming European launch and ongoing clinical trials.
