BridgeBio Pharma (BBIO), Madrigal Pharmaceuticals (MDGL) and Cytokinetics (CYTK) traded meaningfully lower in recent weeks as investors question the merits of holding positions in the US biotech stocks amid a lack of major near-term catalysts, BofA Securities said in a note previewing the companies' Q3 results.
Ligand Pharmaceuticals (LGND) is the exception, having outperformed the broader biotech sector this year.
BofA noted that BridgeBio shares have fallen 22% since its Q2 results. Beyond the near-term outlook for Attruby, a treatment for transthyretin amyloid cardiomyopathy, investors remain reluctant to step in amid few near-term catalysts and the likelihood of elevated operating losses through 2027.
However, the investment firm believes these overhangs are masking solid fundamentals. It cut its price target to $102 from $104 and reiterated its buy rating, citing significant upside not yet reflected in the shares.
For Madrigal, BofA expects a steady quarter but said investor debate is likely to shift toward the growing competitive landscape for treatments for metabolic dysfunction-associated steatohepatitis, or MASH.
The firm expects commentary on patient additions, prescribing depth, access and market growth to remain largely unchanged from the Q2 earnings call, which may not be enough to support the shares. BofA lowered its price target to $533 from $543 and reiterated its neutral rating.
For Cytokinetics, BofA expects the launch of Myqorzo, a treatment for obstructive hypertrophic cardiomyopathy, to dominate the Q3 results discussion as the drug enters its second full quarter on the market. However, the firm sees little likelihood that the update will materially improve investor sentiment.
The investment firm noted that Cytokinetics' recent messaging has become more cautious, with management pointing to a linear near-term trajectory. The firm reiterated its neutral rating, citing uncertainties around the growth outlook, and cut its price target to $81 from $85.
BofA sees upside in Ligand that investors may be overlooking and expects a strong quarter despite cooling sentiment. In addition to continued momentum from Filspari, a treatment for kidney disease, and Ohtuvayre, the firm believes investors are underestimating the contribution from Ligand's acquisition of Xoma and stronger second-half Captisol sales.
BofA raised its price target on Ligand to $406 from $388 and reiterated its buy rating.
Price: 67.61, Change: +1.22, Percent Change: +1.84
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