On Friday, RBC Capital Markets adjusted its stance on IGM Biosciences (NASDAQ:IGMS) stock, downgrading it from Outperform to Sector Perform. The firm also significantly reduced the price target for the company's shares, setting it at $1.50, a steep decline from the previous $20.00. The stock, currently trading near its 52-week low of $5.79, has seen a significant decline of about 44% over the past year, according to InvestingPro data.
The downgrade comes in response to IGM Biosciences' recent announcement that it would halt development on its leading IgM-based bispecific autoimmune clinical pipeline. Additionally, the company disclosed plans to reduce its workforce by 73% and to explore strategic alternatives for its operations. InvestingPro data shows the company has been quickly burning through cash, with an EBITDA of -$223.95 million in the last twelve months, though it maintains a healthy current ratio of 5.22.
RBC Capital's analyst cited these developments as the key reasons for the downgrade, anticipating a sharp decline in the value of IGM Biosciences shares. The new price target reflects the analyst's expectation that the stock will stabilize at a level close to the company's projected cash reserves approximately one year from now.
IGM Biosciences' decision to discontinue its primary clinical pipeline and the subsequent workforce reduction represent significant changes in the company's strategy and operational capacity. These changes have prompted RBC Capital to reassess the company's stock, leading to the revised rating and price target.
Market watchers and investors are now observing how IGM Biosciences' stock will perform following these announcements and the adjustments made by RBC Capital. According to InvestingPro's Fair Value analysis, the stock appears to be undervalued at current levels. The company's search for strategic alternatives and the impact of these corporate decisions on its financial position will be closely monitored in the coming months.
InvestingPro subscribers have access to 10 additional key insights and a comprehensive Pro Research Report that provides deeper analysis of IGM Biosciences' financial health and future prospects.
In other recent news, IGM Biosciences has undergone significant strategic changes, including the discontinuation of two drug candidates, imvotamab and IGM-2644, for the treatment of autoimmune diseases. This decision was based on data from Phase 1b studies demonstrating inadequate B cell depletion. Following this strategic update, BMO Capital Markets downgraded IGM Biosciences from Outperform to Market Perform and drastically cut the price target from $21.00 to $2.00.
Conversely, RBC Capital Markets maintained its Outperform rating and increased its price target to $20.00, reflecting confidence in the company's pivot towards the autoimmune sector.
These are recent developments and part of a broader shift in the company's direction. It's important to note that the company's EBITDA for the last twelve months was -$224 million, indicating a rapid cash burn, yet it maintains a healthy current ratio of 5.22. Finally, IGM Biosciences' financial health and future prospects are being closely monitored by investors and market analysts.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.