Today, Viking Therapeutics' shares surpassed market expectations.
Despite being an active company, Viking Therapeutics (VKTX) experienced stock movement on Monday due to external news. A financial analyst maintained his optimistic view on the clinical-stage biotech, which positively influenced investor sentiment and pushed its share price up by around 3%. This increase was enough to surpass the S&P 500 index, which concluded the trading day with a 0.4% increment.
A Promising Prospect
Similar to many investors, Morgan Stanley analyst Michael Ulz perceives significant potential in VK2735, Viking's investigational weight-loss drug. In his opinion, the company's stock is an overweight (equivocal to buy) position, with a price target of $105 per share.
VK2735 has demonstrated impressive results in initial and intermediate-stage clinical trials, and is anticipated to proceed to a significant and extensive phase 3 trial soon. If the trial yields positive results and the medication secures FDA approval, it would instantly rival the highly popular GLP-1 drugs Wegovy from Novo Nordisk and Eli Lilly's recently approved Zepbound.
In his recent research note, Ulz highlighted potential for share price improvement: "Our analysis suggests a favorable risk/reward (30%/15%/-20%). We foresee potential for substantial upside."
Three Speculated Outcomes
In his report, Ulz presented three potential futures for VK2735. In the first scenario, if the drug demonstrates even modest weight loss enhancement and maintains a safety profile similar to early tests, its share price could potentially surge by 30%.
The second and third scenarios envision less promising laboratory findings, with moderate performance sparking only 15% upside, and a lack of additional weight loss at higher doses resulting in "significant downside" of 20%.
Based on Morgan Stanley's analysis, investing in Viking Therapeutics could potentially yield significant returns, with their analyst Michael Ulz viewing VK2735 as an overweight position with a target price of $105 per share. The successful outcome of the upcoming phase 3 trial and FDA approval could position VK2735 to compete with popular GLP-1 drugs like Wegovy from Novo Nordisk and Eli Lilly's Zepbound, leading to a potential share price surge of up to 30%.
