Viking Therapeutics (NASDAQ:VKTX) stock is up approximately 300% year-to-date. This makes it the top gainer among U.S.-listed mid-cap stocks. Salad-focused restaurant chain Sweetgreen (NYSE:SG) is a distant second, with a year-to-date return of about 100%.
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As for Viking Therapeutics, the fast 2024 start is all about the weight loss drug boom. The San Diego-based biopharmaceutical company develops novel therapies for various metabolic and endocrine disorders. It has three programs that are in clinical trials — including potential treatments for NASH and X-ALD — but interest in the stock is centered on VK2735, the company’s innovative obesity drug.
A little over a year removed from being a little-known penny stock, VKTX climbed as high as $99.41 on February 28, 2024. Despite its atmospheric rise, Wall Street research firms continue to strike a bullish tone. In fact, all eight analysts that have weighed in on the stock over the past month have assigned it a Buy rating.
It’s hard to go against the Street’s unanimously bullish view of VKTX. I, too, see the stock moving higher from here, given its exposure to an obesity drug market that could exceed $100 billion by 2030. Large-cap peer Novo Nordisk (NYSE:NVO) has seen its share price surge in recent months due to the immense popularity of its Ozempic and Wegovy drugs. The valuations of Eli Lilly & Co. (NYSE:LLY) and those of several other pharmaceutical companies developing GLP-1 obesity drugs have also swelled since last year.
Viking Therapeutics is quickly making a name for itself in this market. Let’s see what analysts are saying about the company’s growth potential.
Viking Therapeutics’ Obesity Program Is Advancing
Five-star-rated Oppenheimer analyst Jay Olson may be Viking Therapeutics’ biggest bull. Last week, Olson raised his price target on VKTX to a Street-high $138.00, which implies 85% upside from current levels. This came after the biotech reported positive top-line results from the Phase 1 trial of oral VK2735. The analyst noted that the results of the Phase 1 trial support advancement into Phase 2, which expands an already impressive opportunity for Viking Therapeutics’ obesity program.
In tandem with its oral weight loss pill, the company is developing an injectable formulation of VK2735, which is showing promising results of its own. In February 2024, Viking Therapeutics announced positive top-line results from its Phase 2 VENTURE trial of the injectable candidate. Patients with obesity saw up to 13.1% placebo-adjusted mean weight loss after 13 weeks of treatment. Offering both injectable and oral options may help the company capture a greater share of the obesity management market.
Oppenheimer isn’t the only one feeling bullish about VKTX. Naz Rahman from Maxim Group recently reiterated his Buy rating on the stock and kept a $120.00 price target. The analyst cited several factors, including the encouraging clinical results. The oral tablet version of VK2735 achieved up to 3.3% mean weight loss in a 28-day multiple ascending dose (MAD) study.
More importantly, Rahman believes that the drug’s favorable safety profile could give Viking Therapeutics a competitive advantage. Compared to other GLP-1 drugs, VK2735 had a low incidence of gastrointestinal (GI) adverse effects.
Viking Therapeutics plans to initiate a Phase 2 trial of oral VK2735 in the second half of 2024. As management noted, this study could feature longer treatment periods and higher doses, which hold the potential for greater weight loss.
Adult Obesity Has More Than Doubled Since 1990
A recent World Health Organization (WHO) report shows that 43% of adults are overweight, and 16% are living with obesity. Globally, adult obesity has more than doubled, and adolescent obesity has quadrupled since 1990. Obesity has several negative health consequences — including increased risk of heart disease, type 2 diabetes, and certain cancers — and is, therefore, a major global health issue.
What does this mean for Viking Therapeutics? If the company can continue to demonstrate the efficacy and safety of its obesity drugs, it could eventually have two commercialized products to sell. And if healthcare practitioners continue to prescribe weight management drugs to meet rising patient demand, Viking Therapeutics could get a significant chunk of a large, growing market.
What Is the Consensus Price Target for VKTX Stock?
Turning back to Wall Street, Viking Therapeutics has a Strong Buy consensus rating. This is based on nine Buys, no Holds, and no Sells issued in the past three months. The average Viking Therapeutics price target is $113.50, which implies 42.7% upside potential over the next 12 months. Analyst price targets range from $90.00 to $138.00.
The Bottom Line on VKTX Stock
Viking Therapeutics has shown promising results in early-phase studies of its injectable and oral obesity drug candidates. The company’s share price has already quadrupled this year, but the Wall Street community continues to offer bullish commentary. This suggests it may not be too late for investors to gain from 2024’s best-performing mid-cap stock.
