Several days after enjoying a massive 53% pop on news of an important new collaboration, Alector's (NASDAQ:ALEC) stock got a fresh, 12% lift Tuesday from an analyst's dramatic price target increase.
Citigroup prognosticator Neena Bitritto-Garg has caught a case of bull fever with Alector. She raised her price target to $43 per share from the previous $31, reiterating her buy recommendation on the stock.
A key reason for this new burst of optimism is that collaboration. Last week, Alector announced that it has signed a deal with globe-spanning pharmaceutical company GlaxoSmithKline (NYSE:GSK). Under its terms, Alector and GlaxoSmithKline will jointly develop two monoclonal antibodies with the aim of bringing them to market. These molecules can be used to target various neurogenerative disorders.
Very much putting its money where its mouth is, GlaxoSmithKline is handing over $700 million in upfront payments to the biotech. Alector can also earn up to an additional $1.5 billion if certain milestones are met in the two programs.
Somewhat understating the case, Bitritto-Garg characterized the GlaxoSmithKline arrangement as "highly positive," given the funding involved.
One major goal of any biotech is to partner with a large and well-capitalized peer in order to provide capital for its research -- mission accomplished for Alector. Of course, there's no guarantee the companies will bring any product to market. Still, the news is overwhelmingly positive, so Alector continues to take a big turn in the investor spotlight.