On Wednesday, Jefferies showed increased confidence in Morphic Therapeutic (NASDAQ:MORF) by raising the company's price target from $45.00 to $60.00. The firm maintained a Buy rating on the stock, citing the upcoming Phase IIB ulcerative colitis (UC) readout as a pivotal factor. This trial, expected in the first half of 2025, is drawing considerable attention due to the potential of Morphic's oral pill.
The analyst from Jefferies highlighted that the market cap of Morphic, currently at $1.8 billion, becomes more compelling as the company approaches the Phase IIB UC readout. The firm's growing conviction is based on the view that the drug's efficacy bar is attainable, referencing recent approvals like mirikizumab that had a 10-15% efficacy rate.
With a proven mechanism and commercial success demonstrated by similar treatments, the analyst sees a strong case for Morphic's offering.
Entyvio, a comparable drug in the market, has achieved a run rate of approximately $5.6 billion for the fiscal year 2023. The analyst pointed out that Morphic's market valuation at $1.8 billion is attractive, especially when considering the potential market opportunity.
The price target increase to $60 is grounded on expectations for positive data from the upcoming trial. With the Phase IIB trial anticipated within the next year, Jefferies believes that the data could significantly impact Morphic's valuation and market position. The firm's outlook remains optimistic, with a continued Buy rating indicating a positive view of the stock's future performance.
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