What happened

Shares of Arcturus Therapeutics (NASDAQ:ARCT) were skyrocketing 40.9% higher as of 3:10 p.m. EST on Thursday. The huge gain came after Wells Fargo analyst Jim Birchenough initiated coverage on the stock with an overweight rating. He also set a $118 price target -- a premium of 139% to Arcturus' closing price on Wednesday.

So what

Arcturus' shares plunged in December after the company announced updated results from a phase 2 study of COVID-19 vaccine candidate ARCT-021 that disappointed investors. So why is Birchenough so bullish about the biotech stock?

COVID-19 vaccine and syringe on top of a stock chart

Image source: Getty Images.

He thinks that ARCT-021 could be more successful than many expect. In particular, Birchenough still anticipates that the experimental vaccine could be highly effective at a lower dosage than the leading coronavirus vaccines.

The problem for investors is that there's no way right now to know for sure if Birchenough will ultimately be proven right. However, if ARCT-021 does achieve high efficacy and a solid safety profile with a single dose, Arcturus could easily hit the analyst's price target. A single-dose COVID-19 vaccine would be very attractive to governments across the world.

Now what

We'll have to wait a while to know whether or not Birchenough's optimism is well founded. Arcturus is conducting a phase 2 study in the U.S. and Singapore evaluating both single-dose and two-dose regimens of ARCT-021. The company expects to announce interim data from this study early this year. If all goes well, it plans to advance the vaccine candidate into a global late-stage clinical study in the second quarter of 2021. That could set the stage for Arcturus to file for Emergency Use Authorization in the second half of the year.