On Friday, BMO Capital Markets adjusted its stance on IGM Biosciences (NASDAQ:IGMS) stock, downgrading the company from Outperform to Market Perform. The firm also significantly reduced the price target for the biotechnology firm's shares, setting it at $2.00, a steep decline from the previous target of $21.00. The stock, currently trading at $6.20 with a market capitalization of $369 million, has fallen nearly 44% over the past year. According to InvestingPro analysis, the stock appears undervalued at current levels.
The downgrade follows IGM Biosciences' recent strategic update, which included the decision to discontinue the development of two of its drug candidates, imvotamab and IGM-2644, for the treatment of autoimmune diseases.
According to BMO Capital Markets, the data from Phase 1b studies of imvotamab, which was being evaluated for rheumatoid arthritis and systemic lupus erythematosus, demonstrated inadequate B cell depletion, leading to the company's reassessment of its product pipeline. InvestingPro data reveals the company is quickly burning through cash, with an EBITDA of -$224 million in the last twelve months, though it maintains a healthy current ratio of 5.22.
IGM Biosciences' strategic shift away from these drug candidates was unexpected, as the T cell engager (TCE) approach targeting CD20 had a strong mechanistic rationale. The firm's decision underscores the inherent challenges and unpredictability associated with T cell mediated therapies in the realms of cancer and autoimmune diseases.
The company has not provided further details on the potential financial impact of this strategic pivot or any future plans for its remaining assets. The market's response to BMO Capital Markets' rating downgrade and the subsequent price target reduction reflects the uncertainty surrounding IGM Biosciences' path forward following the discontinuation of key drug candidates.
For deeper insights into IGM Biosciences' financial health and future prospects, investors can access comprehensive analysis and 10+ additional ProTips through InvestingPro's detailed research reports.
In other recent news, IGM Biosciences has been in the spotlight following significant strategic shifts towards the development of treatments for autoimmune diseases.
The company's Q2 financial results revealed a net loss of $0.79 per share, a deviation from the initially projected gain of $0.21 per share. However, H.C. Wainwright revised its full-year 2024 net loss projection for IGM Biosciences to $2.31 per share, an improvement from the previously estimated net loss of $3.27 per share.
BMO Capital has set a $21 target for IGM Biosciences, with an Outperform rating, indicating a positive outlook for the company's future. This rating is contingent on the company's continued clinical development and the successful differentiation of its product candidates in a competitive market.
RBC Capital Markets also maintained its Outperform rating on IGM Biosciences, increasing the price target to $20.00 from the previous $17.00, reflecting confidence in the company's strategic shift towards the autoimmune sector. However, JPMorgan downgraded the company from 'Neutral' to 'Underweight' and reduced its price target to $9.00.
With an overall "WEAK" Financial Health Score according to InvestingPro, investors are advised to closely monitor IGM Biosciences' progress through its clinical milestones and cash position.
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