Rhythm Pharmaceuticals Remains on HC Wainwright’s Buy List with Focus on Niche Obesity Treatments From Investing.com

On Monday, HC Wainwright reiterated its Buy rating on Rhythm Pharmaceuticals (NASDAQ:RYTM) with an unchanged price target of $64.00. The company’s confidence in the stock is based on expected sustained sales growth from sales of IMCIVREE (setmelanotide), particularly in niche obesity indications.

The company updated its revenue forecasts ahead of third-quarter 2024 financial results. The full-year forecast for 2024 was revised to $123.2 million, a contrast from the previously estimated $129.3 million. Likewise, the sales forecast for the full year 2025 was revised from $187.6 million to $178.5 million.

The profit forecasts were also adjusted. Expected full-year 2024 net loss is now $4.42 per share, compared to the previous estimate of $4.33 per share. For 2025, net loss expectations were revised to $2.56 per share from $2.26. These adjustments reflect slightly higher market penetration and slightly lower prices consistent with current market conditions.

Additionally, HC Wainwright increased the likelihood of approval of IMCIVREE for the treatment of hypothalamic obesity (HO) from 60% to 65%. This adjustment reflects the firm’s view that this represents a de-risked opportunity for Rhythm Pharmaceuticals. Despite the revised forecasts, the company’s long-term outlook remains positive, as evidenced by its reiterated Buy rating and 12-month price target of $64.

In other recent news, Rhythm Pharmaceuticals reported significant developments. The annual meeting of shareholders resulted in the re-election of three Class I directors and the approval of all proposals, demonstrating shareholder confidence in the company’s management. Rhythm Pharmaceuticals also posted robust results in the second quarter of 2024, with a profit of $29.1 million, primarily from sales of the drug Imcivree.

The US Food and Drug Administration (FDA) accepted Rhythm Pharmaceuticals’ Supplemental New Drug Application (sNDA) for Imcivree to expand the treatment of younger children with genetic obesity-related disorders. This development underscores the company’s commitment to expanding its therapeutic offering.

In financial analysis, JMP Securities started monitoring Rhythm Pharmaceuticals with a “Market Outperform” rating, signaling positive expectations for the company’s stock. Canaccord Genuity, on the other hand, adjusted its financial outlook and lowered its price target from $79 to $77, but maintained its Buy rating.

Rhythm Pharmaceuticals is also making progress with its Phase 3 trial of setmelanotide in patients with hypothalamic obesity and has initiated Phase 2 trials for two new MC4R agonists, further expanding its development pipeline.

Investing Pro Insights

Rhythm Pharmaceuticals’ financial metrics and market performance are consistent with HC Wainwright’s optimistic outlook. According to InvestingPro data, the company’s revenue growth is impressive, with a recent increase of 132.56% in the twelve months ending in Q2 2024. This robust growth supports the firm’s confidence in IMCIVREE’s sales potential.

InvestingPro Tips highlights Rhythm’s “impressive gross profit margins,” which is reflected in the data showing a gross profit margin of 88.8% for the same period. This strong margin indicates efficient cost management and potential for profitability as sales increase.

The stock’s performance has been remarkable, with a total return of 112.28% over the last year, according to InvestingPro data, indicating strong market confidence. This is consistent with the “high return over the last year” mentioned in InvestingPro Tips.

While HC Wainwright forecasts losses in 2024 and 2025, it’s worth noting that InvestingPro Tips points out that Rhythm “operates with a moderate level of leverage” and “cash assets exceed short-term obligations,” which could provide financial flexibility while the company aims for profitability continues to work towards it.

For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Rhythm Pharmaceuticals that provide a deeper understanding of the company’s financial health and market position.

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