On Tuesday, Evercore ISI adjusted its price target for Akero Therapeutics (NASDAQ:AKRO), a biotechnology company focused on developing treatments for non-alcoholic steatohepatitis (NASH). The new price target is set at $38.00, reduced from the previous target of $50.00. Despite this change, the firm maintains an Outperform rating on the stock.
The adjustment follows a reassessment of Akero's financial model, aligning it with that of Madrigal Pharmaceuticals (NASDAQ:MDGL), which has recently advanced its own NASH treatment, Rezdiffra, through phase 3 trials and into the initial stages of commercial launch. The comparison reflects the anticipated expenses as Akero progresses with its phase 3 MASH program.
Evercore ISI's revised model takes into account Akero's recent capital raise, which amounted to $367 million. This funding boost has elevated the company's cash balance to over $900 million, a sum that is expected to fully support the phase 3 MASH program's expenses.
Akero's lead candidate, efruxifermin, is currently in phase 3 studies for NASH patients with stage F2 to F3 fibrosis, based on both histological data and real-world evidence. These studies commenced in December. Moreover, a phase 3 study for patients with stage F4 fibrosis is slated to begin in the second quarter of the year.
The firm's analyst highlighted the potential for significant growth, noting that the new price target represents approximately 80% upside from the stock's current trading levels. Akero Therapeutics is now in what the analyst describes as "execution mode," as it advances efruxifermin through its clinical trials.
InvestingPro Insights
In light of Evercore ISI's recent price target adjustment for Akero Therapeutics, it's pertinent to consider additional insights that can further inform investors. According to InvestingPro, Akero holds more cash than debt on its balance sheet, providing a strong foundation as it progresses through its phase 3 MASH program. Moreover, two analysts have revised their earnings upwards for the upcoming period, reflecting a positive outlook on the company's financial performance.
The company's market capitalization stands at $1.4 billion, with a notable price uptick of 38.3% over the last six months, despite being in a non-profitable phase over the last twelve months. Akero's P/E ratio is currently negative at -6.32, which is not uncommon for biotech companies in the development stage, and the PEG ratio as of Q1 2024 is 0.38, suggesting potential growth value relative to its earnings growth.
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