NEW YORK - Citigroup has revised its stance on Larimar Therapeutics (NASDAQ: LRMR), upgrading the stock from Neutral to Buy, with a price target suggesting an impressive 284% potential upside. This optimistic outlook follows a notable increase in institutional investment in the biotech firm, which is currently engaged in developing treatments for Friedreich's ataxia (FA).
Institutional investors have significantly bolstered their positions in Larimar Therapeutics, now holding over 38 million shares across 154 funds. This marks a substantial rise in both the number of shares held and the diversity of institutional backers. Among these, investment firms such as Deerfield Management and CHI Advisors are prominent shareholders, with stakes of 39% and 8% respectively.
Moreover, Verition Fund Management has recently augmented its investment by 6%, showcasing confidence in Larimar's prospects. Similarly, Janus Henderson Group (NYSE:JHG) increased their shareholding by 41%, despite a reduction in their overall portfolio allocation to Larimar by nearly 20%. Citadel Advisors also made adjustments, cutting their stake by 20% but raising their portfolio allocation to the company by almost 9%.
The heightened interest from these institutional players comes as Larimar advances its lead compound, CTI-1601, through Phase 1 clinical trials. CTI-1601 is being investigated as a potential therapeutic agent for FA disease, a debilitating genetic condition for which there are currently limited treatment options.
Citigroup's bullish upgrade reflects broader anticipation among investors that positive clinical developments could propel Larimar's stock value significantly. As the company progresses with its trials, the market will be closely monitored for further updates on CTI-1601's efficacy and safety profile, which could be pivotal for Larimar's future growth trajectory.
InvestingPro Insights
In light of the recent developments, InvestingPro's real-time data and tips offer valuable insights into Larimar Therapeutics. According to InvestingPro, the company holds more cash than debt on its balance sheet and has liquid assets that exceed its short-term obligations, indicating a strong financial position. However, the company has not been profitable over the last twelve months, and analysts do not anticipate the company will turn profitable this year.
From a metrics perspective, Larimar's market cap stands at $144.45M, with a P/E Ratio of -4.33, reflecting the company's current lack of profitability. The company's stock has seen a significant return over the last week, with a 34.29% increase in its price. The InvestingPro Fair Value for Larimar is $3.15, slightly higher than its previous close at $3.09.
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