While Ultragenyx Pharmaceutical (RARE 2.25%) provided the market with disappointing news yesterday -- shares plunged more than 42% -- it appears that investors aren't completely writing off the company's potential as a developer of treatments for rare diseases. A firm's favorable view of Ultragenyx stock is motivating some investors to click the buy button today, helping the stock recover from its recent decline.
As of 2:51 p.m. ET, shares of Ultragenyx are up 13.2%.
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Despite the company's setback, one analyst maintains an auspicious outlook
Maintaining an overweight rating, Wells Fargo analyst Benjamin Burnett reduced the price target on Ultragenyx stock to $45 from $65 today.
NASDAQ: RARE
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According to TheFly.com, Burnett informed investors in a research note that the stock now features a favorable risk-reward profile, anticipating feedback from the Food and Drug Administration (FDA) regarding setrusumab, as it provided statistically significant results with respect to bone mineral density in its Phase 3 studies. Moreover, Burnett stated that "it's too soon to throw in the towel" on Ultragenyx.
With Ultragenyx stock closing at $19.72 yesterday, Burnett's $45 price target implies upside of more than 128%.
Ultragenyx reported yesterday that its Phase 3 Oribt and Cosmic studies of setrusumab for osteogenesis imperfecta failed to achieve their primary endpoints; however, they did achieve secondary endpoints, including improvements in bone mineral density.
Should investors add Ultragenyx stock to their buy list?
While Burnett's positive sentiment on Ultragenyx stock is worth acknowledgment, it's far from a cause, in and of itself, to make the pharmaceutical stock a buy. Ultragenyx generates revenue from the sales of several products, but it consistently incurs net losses. At this point, therefore, Unltragenyx stock should only remain a consideration for those with higher risk tolerances.
