On Wednesday, BMO Capital Markets adjusted its stock price target for Scholar Rock (NASDAQ:SRRK), a biopharmaceutical company, increasing it slightly to $39.00 from the previous $38.00. The firm sustained its Outperform rating on the stock. In the same report, BMO Capital highlighted the third-quarter earnings per share (EPS) of MAG Silver (NYSE:MAG), which came in at $0.22, aligning with their projections and surpassing the consensus of $0.18.
Juanicipio, a joint venture in which MAG Silver has a significant interest, reported third-quarter revenue of $176 million, which was above BMO Capital's estimate of $154 million. This performance was tempered by increased depreciation and taxes.
The silver-equivalent all-in sustaining cost (AISC) for the quarter was reported at $10.83 per ounce of silver equivalent (AgEq), which is lower than BMO's anticipated $11.24 per ounce and also showed a decrease from the previous quarter.
The joint venture's financial health was further evidenced by its substantial operating cash flow and free cash flow (FCF), which were reported at $110 million and $97 million, respectively, outperforming BMO Capital's expectations. The firm emphasized the ongoing operational strength at Juanicipio and maintained its forecast that 2024 production would exceed the upper end of the provided guidance.
The positive outlook and financial results from Juanicipio contribute to the rationale for the maintained Outperform rating and the adjusted price target for Scholar Rock. The report reflects BMO Capital's anticipation of continued strong performance from the operations at Juanicipio.
In other recent news, biopharmaceutical company Scholar Rock reported positive results from its Phase 3 SAPPHIRE study for the drug apitegromab, a potential treatment for spinal muscular atrophy (SMA).
The study met its primary endpoints, leading to a significant improvement in motor function. In light of these developments, investment firm H.C. Wainwright raised its price target for Scholar Rock to $40, up from the previous target of $35, and maintained its Buy rating on the stock.
Furthermore, Scholar Rock is preparing to submit regulatory applications in Q1 2025, with a U.S. commercial launch of apitegromab planned for Q4 2025. The company also completed a $345 million follow-on offering, raising its cash balance to approximately $463 million. Moreover, Scholar Rock is developing SRK-439 and conducting the EMBRAZE Phase 2 study, both aimed at obesity management.
Analysts suggest that apitegromab has the potential to generate over $1 billion in revenue. These recent developments reflect Scholar Rock's focus on addressing unmet needs in SMA treatment and obesity management.
InvestingPro Insights
Scholar Rock's recent performance and market position offer additional context to BMO Capital's optimistic outlook. According to InvestingPro data, the company's market capitalization stands at $2.45 billion, reflecting significant investor interest. This aligns with the stock's impressive performance, showing a 174.56% price return over the last three months and a 169.84% return over the past year.
However, it's important to note that Scholar Rock is not currently profitable, with a negative P/E ratio of -12.02 for the last twelve months as of Q2 2024. This is consistent with the biopharmaceutical industry, where companies often invest heavily in research and development before achieving profitability.
InvestingPro Tips highlight that two analysts have revised their earnings upwards for the upcoming period, which could support BMO Capital's positive stance. Additionally, the company's liquid assets exceed short-term obligations, suggesting a stable financial position despite the lack of profitability.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Scholar Rock, providing a deeper understanding of the company's financial health and market position.
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