Viking Therapeutics (NASDAQ: VKTX) saw its stock surge over 10% in pre-market trading on November 4, following the release of highly encouraging early-stage results for its experimental obesity drug, VK2735.
In a study presented at the ObesityWeek conference, patients taking a 100 mg dose of VK2735 lost an average of 8.2% of their body weight after 28 days, significantly outperforming the placebo group.
This oral formulation targets the dual GLP-1/GIP receptors and positions Viking as a competitive player alongside giants like Eli Lilly and Novo Nordisk in the lucrative obesity treatment market.
Viking Therapeutics’s Q3 financial performance
Viking’s Q3 earnings report, released on October 23, highlighted a GAAP EPS of -$0.22, surpassing estimates by $0.03.
More notably, the company reinforced its financial resilience with a cash position of $930 million, a substantial increase from $362 million at the end of 2023.
This robust liquidity underscores Viking’s ability to sustain aggressive R&D efforts without imminent liquidity concerns.
R&D expenses for the quarter rose to $22.8 million, driven by clinical trial activities and regulatory preparations.
VKTX stock: analysts’ optimism and price targets
Wall Street analysts are bullish on Viking’s prospects. J.P. Morgan initiated coverage with an Overweight rating, setting an $80 price target, while Leerink Partners and Oppenheimer reiterated their positive outlooks.
Analysts are particularly optimistic about VK2735’s potential, anticipating significant market share in the emerging oral obesity drug sector.
The consensus reflects confidence in Viking’s pipeline, expecting substantial share price appreciation as the company progresses through clinical milestones.
Expanding pipeline and key catalysts
Beyond VK2735, Viking is advancing multiple pipeline candidates. The VK2809 program for NASH has delivered compelling Phase 2b results, with statistically significant improvements in liver fat reduction and fibrosis.
Additionally, the VK0214 trial for X-linked adrenoleukodystrophy (X-ALD) has shown promising reductions in very long-chain fatty acids, positioning Viking as a leader in this rare disease market.
Obesity market size
Viking’s market capitalization stands at under $9 billion, a modest figure compared to the projected $130 billion obesity drug market by 2030.
The firm’s cash runway and strategic R&D investments could catalyze further valuation gains, especially as it enters late-stage trials and potentially commercializes its lead candidates.
The company’s ability to attract partnerships or acquisition offers will likely play a pivotal role in its growth trajectory.
Despite the optimism, Viking faces formidable competition from established players like Eli Lilly and Novo Nordisk, who are also developing oral obesity therapies.
The biotech firm must navigate regulatory hurdles, manufacturing scale-up, and market penetration to realize its full potential.
Valuation metrics and market potential
With a stock price currently around $80 and an average analyst target of $110, Viking is valued attractively against its growth prospects.
The company’s price-to-cash ratio indicates a strong financial buffer, crucial for sustaining its R&D pipeline and potential Phase 3 trials.
Analysts forecast Viking’s revenues to skyrocket by the end of the decade, fueled by blockbuster potential in obesity and NASH treatments.
However, market sentiment often fluctuates, and it’s essential to see how these fundamentals translate into the stock’s price action.
Let’s now turn to the charts to assess the technical indicators and uncover what they reveal about Viking’s current and future trading potential.
VKTX stock: will it break above its trading range?
Viking’s stock skyrocketed to nearly $100 from $20 levels earlier this year in February following which it has traded in a $48-$80 range.
Today’s spike will bring the stock again close to the top of this trading range.
Source: TradingView
If Viking has to continue its upward journey, it is crucial for it to break above this range and give a daily closing above $81.86.
If it manages to do so today or in the upcoming days, investors with a bullish outlook may initiate fresh long positions.
For traders with a bearish, today’s spike offers a low-risk-high-reward entry. They can initiate short positions above the $80 level with a stop loss at $89.2.
If the stock doesn’t breach that stop loss and loses momentum, it can again fall back to the lower end of its trading range near $50 in the coming weeks, where one can book profits.
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