Analyst Explains Why They Upgraded Their Rating on Rhythm Pharmaceuticals Inc (RYTM)

Rhythm Pharmaceuticals Inc (RYTMResearch Report) received a Buy rating and a $34 price target from Stifel Nicolaus analyst Derek Archila yesterday. The company’s shares closed yesterday at $20.66, close to its 52-week low of $20.52.

Archila commented:

“We are upgrading RYTM shares to Buy and maintaining our $34 target price. Our original Hold thesis on shares when we launched in Sept. 2018 (RYTM -34% vs. since initiating) was predicated on: (1) the lack of stock moving catalysts; and (2) shares seemed expensive; however, our view of setmelanotide’s efficacy and tolerability in POMC and LEPR obesities, overall, had been positive. At current levels, we think the risk/reward is more favorable given setmelanotide’s positive Phase 2 data in POMC and LEPR patients where it demonstrated a meaningful benefit on weight loss and hunger scores. We believe both Phase 3 studies (data expected in 3Q19) will be positive and think in our “homerun” scenario the stock could move to the low ~$40 range.”

According to TipRanks.com, Archila has currently no stars on a ranking scale of 0-5 stars, with an average return of -9.4% and a 31.8% success rate. Archila covers the Healthcare sector, focusing on stocks such as Madrigal Pharmaceuticals Inc, NGM Biopharmaceuticals Inc, and Principia Biopharma Inc.

Rhythm Pharmaceuticals Inc has an analyst consensus of Strong Buy, with a price target consensus of $39.75, a 92.4% upside from current levels. In a report issued on June 28, Cowen & Co. also maintained a Buy rating on the stock with a $40 price target.

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Based on Rhythm Pharmaceuticals Inc’s latest earnings release for the quarter ending March 31, the company reported a quarterly GAAP net loss of $28.97 million. In comparison, last year the company had a GAAP net loss of $14.41 million.

Based on the recent corporate insider activity of 22 insiders, corporate insider sentiment is neutral on the stock.

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Rhythm Pharmaceuticals, Inc. develops and commercializes peptide therapeutics for the treatment of gastrointestinal diseases and genetic deficiencies. It focuses on the treatment for Prader-Willi Syndrome and Pro-Opiomelanocortin deficiency obesity.