On Wednesday, Goldman Sachs (NYSE:GS) showed a positive stance on Rhythm Pharmaceuticals (NASDAQ:RYTM) stock, increasing the price target to $59 from $58 while maintaining a Buy rating. The firm's analyst cited continuous progress and encouraging data as key drivers for the revised target.
Rhythm Pharmaceuticals recently announced its third-quarter 2024 product revenues, which totaled $33.3 million. These figures were slightly above the estimates by FactSet consensus and Goldman Sachs, showing an increase of 2.2% and 9.6%, respectively.
The company's consistent patient growth in the U.S. was highlighted, with over 100 new prescriptions during the quarter. This performance aligns with the patient addition trend observed over the past six quarters, despite challenges in patient identification and prescriber education.
The company's revenue from Europe also saw an increase, contributing 30% to the total revenue in comparison to 26% in the second quarter of 2024. This growth was partly due to an approximate $0.5 million advancement of fourth-quarter orders, which was a result of irregular shipping schedules for setmelanotide to countries outside the U.S. where it is being launched.
The focus also remains on Rhythm Pharmaceuticals' Phase 3 study of setmelanotide for treating hypothalamic obesity (HO). Significant attention was drawn to the presentation of real-world weight loss data from eight French adult HO patients at The Obesity Society's ObesityWeek conference.
These findings showcased percent BMI reductions from baseline of 12.8% and 21.3% at the 3- and 6-month intervals, corresponding to weight decreases of 16.8kg and 29.0kg, respectively.
The analyst from Goldman Sachs expressed confidence in setmelanotide's potential to induce meaningful weight loss in HO patients, which is greater than a 10% reduction in BMI, regardless of the patients' age. The firm reiterated its Buy rating for Rhythm Pharmaceuticals and increased the price target to the new level of $59, up from the previous target of $58.
In other recent news, Rhythm Pharmaceuticals has been making significant strides in its operations. The company's Q2 2024 earnings reached $29.1 million, mainly driven by sales of its drug, Imcivree. H.C. Wainwright has maintained a Buy rating on the company, adjusting its full-year 2024 revenue projection to $123.2 million.
Meanwhile, JMP Securities initiated coverage on the company with a Market Outperform rating, indicating positive expectations. However, Canaccord Genuity adjusted its financial outlook, lowering the price target to $77 from $79, while still maintaining a Buy rating.
Rhythm Pharmaceuticals' supplemental New Drug Application (sNDA) for Imcivree has been accepted by the U.S. Food and Drug Administration (FDA), aiming to extend the treatment to younger children with certain genetic obesity disorders. In addition, the company is advancing with its Phase 3 study of setmelanotide in patients with hypothalamic obesity, and has initiated Phase 2 trials for two new MC4R agonists.
In a separate development, Rhythm Pharmaceuticals has announced a joint research collaboration with Axovia Therapeutics Ltd., focused on enhancing the understanding of Bardet-Biedl syndrome (BBS), a rare genetic disorder. The partnership aims to leverage the expertise of both companies in the field of gene therapy to potentially develop new therapeutic options for BBS. These recent developments reflect Rhythm Pharmaceuticals' ongoing commitment to growth and strategic problem-solving.
InvestingPro Insights
Rhythm Pharmaceuticals' recent performance aligns with several key metrics and trends highlighted by InvestingPro. The company's impressive revenue growth of 132.56% over the last twelve months as of Q2 2024 supports Goldman Sachs' positive outlook. This growth is further emphasized by the quarterly revenue increase of 51.28% in Q2 2024, reflecting the strong patient growth and expanding European presence mentioned in the article.
InvestingPro Tips point out that Rhythm Pharmaceuticals operates with impressive gross profit margins, which is evident in the reported 88.8% gross profit margin for the last twelve months. This high margin suggests efficient cost management and potentially strong pricing power for setmelanotide, the company's key product.
The stock's significant return over the last week (13.54%) and strong return over the last year (107.64%) indicate growing investor confidence, possibly driven by the positive clinical data and revenue growth discussed in the article. Additionally, the stock is trading near its 52-week high, with the price at 99.42% of the 52-week high, reflecting the market's optimism about the company's prospects.
It's worth noting that InvestingPro offers 16 additional tips for Rhythm Pharmaceuticals, providing a more comprehensive analysis for investors interested in deeper insights.
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