NVO - Arrowhead adds 11% as SVB upgrades on compelling risk-reward setup

2023-04-12 12:09:05 ET

Arrowhead Pharmaceuticals ( NASDAQ: ARWR ) jumped ~11% Wednesday after SVB Securities upgraded the RNAi therapeutics company to Outperform from Market Perform, citing an attractive risk-reward setup following the recent selloff.

The analyst Mani Foroohar points out that Arrowhead ( ARWR ) has lost ~35% YTD, underperforming the broader biotech and large-cap RNA/DNA therapy peers such as Alnylam ( ALNY ), Ionis ( IONS ) and Moderna ( MRNA ).

"This leaves ARWR trading at ~$2.8B market cap, a discount to the $3.3B at which Dicerna was acquired by Novo Nordisk," ( NVO ) Foroohar explained, referring to Denish pharma's deal for the rival RNAi therapeutics as the most recent M&A standard in the subsector.

According to the analyst, this sets up a compelling risk-reward profile for ARWR, ahead of upcoming data catalysts for its pulmonary portfolio and potential licensing/ partnership deals that could drive upside and address concerns on the financial position and cash burn.

SVB Securities raises the price target on the stock to $35 from $21 to imply a ~33% upside from Tuesday's close.

Read: Seeking Alpha contributor Stephen Ayers shared broadly similar views on Arrowhead ( ARWR ) on Tuesday in issuing a Strong Buy rating on the stock.

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