Viking Therapeutics (VKTX 1.04%) stock inched 2.3% higher through 10:20 a.m. ET Monday, and for a most curious reason.
Truist Securities analyst Joon Lee just lowered his price target on the unprofitable biotech stock. Now why would investors think this is good news for Viking?
NASDAQ: VKTX
Key Data Points
Truist's backhanded compliment for Viking Therapeutics
The theory goes like this: Lee cut his price target on Viking from $95 to $75 a share, warning the company faces "intensifying competition in the obesity space" (as The Fly reports today). Yet even so, Lee says that 2025 will be a "year of execution" for Viking as it begins phase 3 clinical trials on its new GLP-1 obesity drug, VK2735.
Good results from this trial could make Viking the third major investment play on weight loss, joining Novo Nordisk and Eli Lilly at the top of this market.
That's the competition Lee is talking about: Novo and Lilly. But even if Viking doesn't win the market entirely, even capturing just a sliver of the multibillion-dollar global market for GLP-1 drugs could be "material" to Viking's results.
Is Viking Therapeutics stock a buy?
Lee is correct. In fact, with no revenues, much less profit, to its credit, getting literally any drug to market would be a material success for Viking, much less gaining a toehold in the red-hot market for GLP-1 weight loss drugs.
It won't happen quickly; analysts polled by S&P Global Market Intelligence forecast less than $2 million in revenue for Viking this year. However, they expect that number to grow rapidly, to $38 million by 2027, for example -- and to $729 million by 2029, the first year analysts expect to see Viking earn a profit.
Still, a lot has to go right for Viking between now and then, and things could fall apart in a hurry if the phase 3 trials don't pan out. For now, I have to consider Viking still a speculative stock. If you feel you must buy it, make sure to "buy small" and stay diversified.
