Investors looking for stocks that can make dramatic gains in a short time frame might want to turn their attention to the biopharmaceutical industry. Shares of Viking Therapeutics(NASDAQ: VKTX) have already risen more than four-fold this year.
Despite Viking's rapid ascent Oppenheimer analyst, Jay Olson thinks it can climb much higher over the next 12 months. Olson recently raised his price target for Viking Therapeutics to $138 from $116 and kept an outperform rating on the stock.
A better weight management drug?
Oppenheimer's raised price target is a response to positive clinical trial results for an experimental weight-management therapy Viking Therapeutics is developing named VK2735.
VK2735 is a dual GLP-1 and GIP agonist similar to tirzepatide from Eli Lilly. Tirzepatide is the active ingredient in Mounjaro, a diabetes treatment, and Zepbound which is approved for weight management. Estimates vary but analysts on Wall Street think annual tirzepatide sales can exceed $50 billion annually at its peak.
In a mid-stage clinical trial, 35 patients treated with 15 milligrams of VK2735 per week achieved a 14.7% weight reduction. This figure appears competitive with Zepbound, but it's going to be a long time before this still experimental therapy has a chance to compete with Lilly's blockbuster.
Is Viking Therapeutics a buy now?
Analysts aren't wrong to imply a great deal of potential upside for Viking Therapeutics but the stock is probably too risky for most investors. At recent prices, Viking Therapeutics sports an $8.2 billion market cap even though it still has zero approved products to sell. If you don't have an extremely high tolerance for risk, it's best to avoid this stock until after we see positive late-stage clinical trial data.
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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
