On Monday, Leerink Partners adjusted its outlook on PureTech Health (NASDAQ: PRTC), raising the price target to $46 from the previous $45 while maintaining an Outperform rating on the company's stock. With the stock currently trading at $22.11, analysts see significant upside potential, with targets ranging from $45 to $60.50. The adjustment follows PureTech's recent presentation of topline results from the Phase 2b ELEVATE study, which evaluated their wholly-owned asset LYT-100 (deupirfenidone) for use in treating idiopathic pulmonary fibrosis (IPF).
The study results suggest that LYT-100 could potentially offer an improvement over the standard of care anti-fibrotic treatments currently available for IPF. The firm's analyst pointed out that LYT-100 is viewed as the most promising program within PureTech's portfolio, indicating that the recent data supports the drug's potential in addressing the substantial unmet medical need within the IPF market.
According to InvestingPro data, PureTech maintains a strong financial position with more cash than debt and a healthy current ratio of 3.68, though the company is currently burning through cash as it advances its pipeline.
In response to the study findings, Leerink Partners has increased the probability of success (POS) for LYT-100 in their model from 60% to 70%. This adjustment, along with other changes, has led to the revised price target of $46. The firm reiterates its positive stance on PureTech Health, citing the company's hybrid business model—which combines drug development with company incubation—as offering multiple avenues for success in the long term.
The analyst also noted that PureTech's stock is currently undervalued when considering the fundamental value of the company. The positive results from the ELEVATE study and the subsequent increase in the price target reflect confidence in the potential market opportunity for LYT-100 in the treatment of IPF, a disease characterized by lung scarring and a high rate of mortality.
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