BofA Securities on Friday revised its price target on Arcus Biosciences (NYSE: ) to $23.00 from $24.00 previously, while maintaining a neutral rating on the stock. The change reflects a cautious outlook as overall investor sentiment remains tepid despite the company’s recent progress.
Arcus Biosciences reported gradual progress on its pipeline during the quarter. While GAAP earnings per share (EPS) beat consensus estimates, driven by $11 million in partnership revenue growth, the stock’s year-to-date performance hasn’t been great, falling 28% versus 2017. It rose 7% year-on-year.
Investor focus has turned to the company’s HIF-2a inhibitor casdatifan (cas), which is increasingly seen as a key to growth following challenges with TIGIT inhibitors.
While somewhat disappointing due to the lack of data from the 100mg cohort of the ARC 20 Phase 1/1b study, the company’s broad guidance for the second half of 2024 and other developments on the casdatifan program indicate continued interest in the early-stage pipeline.
Arcus Biosciences has expanded enrollment in the 100mg arm of its study, introduced an additional cas plus cabo arm, and is preparing to launch a Phase 3 trial (PEAK-1) in the first half of 2025.
Despite these advances, a lack of clear understanding of the market opportunity for these treatments has led to an assessment that the stock is currently fairly valued.
All in all, BofA Securities’ price target cut from $24.00 to $23.00 is based on an updated cash position and reflects that Arcus Biosciences stock is reasonably priced given current pipeline conditions and market factors.
In other recent news, Arcus Biosciences has been thrust into the spotlight following a series of major developments. The company reported strong results for the first quarter of 2024, with GAAP revenue of $145 million and cash reserves of $1.1 billion.
Cantor Fitzgerald maintains an overweight rating on Arcus Biosciences despite the suspension of Roche’s Phase 2/3 SKYSCRAPER-06 study, signaling a shift in focus from non-small cell lung cancer to upper gastrointestinal cancers.
Truist Securities lowered its price target on Arcus Biosciences to $44 but retained a buy rating, highlighting promising data from early-stage trials across the three assets.
Barclays also maintained its “overweight” rating following the release of the ARC-9 study, which showed a significant survival benefit for patients with third-line colorectal cancer.
Citi reiterated its buy rating and raised its price target to $38, citing promising results from the EDGE-Gastric study, which showed a median progression-free survival of 12.9 months for the entire patient population. These latest developments highlight Arcus Biosciences’ continued progress and potential in advancing its clinical programs.
Investment Professional Insights
Given that BofA Securities revised its price target on Arcus Biosciences, it’s worth considering additional insights from InvestingPro. Notably, the company has a stronger cash position than debt, indicating financial stability, which is a positive sign for investors. Additionally, analysts expect sales to grow significantly this year, indicating potential for revenue growth. It’s worth noting, however, that Arcus Biosciences isn’t expected to make a profit this year, and the company has been burning cash at a rapid pace, which could raise concerns about its long-term financial health.
Judging from the data, Arcus Biosciences has a market capitalization of approximately US$1.25 billion, and its revenue grew at an astonishing 99.16% in the past 12 months as of the first quarter of 2024. It remained negative -55.27%, reflecting potential challenges in cost management. The stock is also trading near its 52-week low, which could provide a buying opportunity for value-seeking investors, especially if they believe in the company’s pipeline potential and strategic moves.
For those wishing to gain a deeper understanding of Arcus Biosciences’ financial health and future prospects, InvestingPro provides additional insights and advice. An additional 9 InvestingPro Tips for Arcus Biosciences are also available at https://www.investing.com/pro/RCUS, providing a comprehensive analysis for investors considering this biotech company.
This article was generated with the support of artificial intelligence and reviewed by an editor. For more information, please see our terms and conditions.
