Tuesday, Canaccord Genuity adjusted its outlook for Stoke Therapeutics (NASDAQ:STOK), reducing the price target to $20 from the previous $21 while maintaining a Buy rating on the stock. The adjustment follows the company's first-quarter results for 2024.
The firm's decision to revise the price target was influenced by several factors, including updated financial modeling and expectations for the company's lead product candidate, STK-001. Canaccord Genuity now includes the year 2035 in its model and projects peak sales for STK-001 to reach $1.48 billion, an increase from the previous estimate of $1.36 billion in 2034.
The revised model by Canaccord Genuity also reflects an anticipated uptick in research and development (R&D) expenditures for the years 2025 and 2026. The increase in R&D spending is primarily attributed to the ongoing development of STK-001. Additionally, the firm has modestly raised its share count estimate to account for a recent capital raise by Stoke Therapeutics.
Despite these changes, Canaccord Genuity continues to see value in Stoke Therapeutics, as indicated by the maintained Buy rating. The firm's valuation is based on a discounted cash flow (DCF) method, and the new price target represents only a slight decrease from the previous estimate.
The analyst's commentary highlighted the continued inclusion of a 33% probability of approval for STK-001, with a potential market launch projected for the year 2028. This cautious yet optimistic outlook on the drug's approval chances factors into the firm's valuation of Stoke Therapeutics' stock.
InvestingPro Insights
Following Canaccord Genuity's recent price target adjustment for Stoke Therapeutics (NASDAQ:STOK), insights from InvestingPro can provide additional context for investors. Stoke Therapeutics holds more cash than debt on its balance sheet, which may offer some financial stability as the company focuses on the development of STK-001. Moreover, the company has seen a strong return over the last three months, with a price total return of 173.5%, and a significant return over the last week at 7.62%.
InvestingPro data reveals a market capitalization of $618.63 million and a high revenue valuation multiple, which could suggest that investors have optimistic expectations for the company's future growth. Despite the lack of profitability in the last twelve months, with a P/E ratio of -4.98, the company's liquid assets exceed short-term obligations, indicating a degree of financial resilience.
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