What happened

Shares of Vaxart (NASDAQ:VXRT) were skyrocketing 27.6% higher as of 11:52 a.m. EDT on Friday. The huge gain came after Piper Sandler analyst Yasmeen Rahimi initiated coverage on the stock with an overweight rating. Rahimi set a price target of $18, reflecting a premium of more than 150% over Vaxart's closing price on Thursday.

So what

It's not unusual for a clinical-stage biotech stock (or any other stock, for that matter) to jump on positive analyst coverage. The important thing for investors to do is to understand why the analyst is bullish.

$1 bill folded into an arrow pointing up.

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In this case, Rahimi especially likes Vaxart's VAAST adjuvant. There have been enough clinical studies including VAAST that its risk level is relatively low, in the analyst's opinion. Primarily because of the adjuvant, Rahimi is optimistic about the potential for success of Vaxart's pipeline candidates.

The small drugmaker is currently evaluating several experimental oral vaccines in early-stage and preclinical testing. Its COVID-19 vaccine candidate, VXA-CoV2-1, has received the most attention from investors.

Now what

Vaxart hopes to advance VXA-CoV2-1 into a phase 2 clinical study this summer. It also plans to begin phase 1/2 studies evaluating variant-specific COVID-19 vaccine candidates in the third quarter of this year. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.