Viking Therapeutics (VKTX 2.88%) stormed the stock market on Wednesday. Shares of the up-and-coming biotech rose by more than 11% not on any proprietary news from the company, but on an analyst's initiation of coverage. That performance was more than enough to top the trajectory of the bellwether S&P 500 index, which rose by slightly over 1% on the day.
32% upside potential, analyst believes
Well before market open, J.P. Morgan's Hardik Parikh launched his coverage of Viking Therapeutics. The analyst is quite bullish on the biotech company's future, as he tagged it as an overweight (buy, in other words) with a price target of $80 per share. Even after Wednesday's rally in the stock, that target suggests nearly 32% upside to the present level.
Like many investors, and not a few pundits, Parikh feels that the company could reap something of a windfall if it successfully brings its investigational GLP-1 obesity drug, VK2735, to market. Such treatments are hotly popular in the U.S. these days because of the country's relatively overweight population.
One advantage VK2735 would have over the few obesity drugs currently approved by the Food and Drug Administration (FDA) is that it is administered orally. Wegovy from Novo Nordisk and Eli Lilly's Zepbound are both delivered via injection.
A monster market in the future
In his note launching his Viking Therapeutics coverage, Parikh waxed bullish about the market for weight loss drugs. "We continue to think the market for GLP-1s will be substantial, with U.S. market sales of around $120 billion in 2030, and orals will play an increasingly important role."
