Akero Therapeutics, the Healthcare sector company, was revisited by a Wall Street analyst today. Analyst Ritu Baral from TD Cowen downgraded the rating on the stock to a Hold and gave it a $58.00 price target.
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Ritu Baral has given her Hold rating due to a combination of factors surrounding the acquisition of Akero Therapeutics by NOVO. The acquisition deal includes a cash offer of $54 per share and a contingent value right (CVR) of $6 per share, contingent upon the U.S. regulatory approval of Akero’s lead asset, efruxifermin (EFX), for the treatment of F4 MASH by June 30, 2031. This acquisition represents a premium over the current stock price, but the potential for future gains is tied to regulatory milestones and approval probabilities.
Baral’s decision to downgrade the stock from Buy to Hold also reflects the adjusted price target of $58, which is based on the deal terms and the net present value of the CVR. The analyst considers the 80% probability of approval in 2029 and factors in annual inflation to determine the current value of the CVR. Additionally, the acquisition by NOVO is seen as a strategic move to bolster its position in the metabolic treatment market, especially given the competitive landscape and upcoming patent expirations. However, the reliance on future regulatory approvals introduces uncertainty, justifying the Hold rating.
Baral covers the Healthcare sector, focusing on stocks such as Sarepta Therapeutics, Insmed, and Krystal Biotech. According to TipRanks, Baral has an average return of 25.4% and a 56.20% success rate on recommended stocks.
In another report released today, H.C. Wainwright also downgraded the stock to a Hold with a $54.00 price target.