On Tuesday, Jefferies began coverage on shares of Alto Neuroscience (NYSE: ANRO), assigning a Buy rating and setting a price target of $33.00. The firm's coverage comes with an optimistic view on the company's growth prospects, highlighting its development of proprietary biomarkers linked to a series of oral drugs aimed at treating central nervous system (CNS) disorders.
The company's pipeline includes over five novel oral drugs that are tailored to provide personalized treatments for disorders with a market value exceeding $1 billion.
Jefferies expressed confidence in the potential upside of the stock, looking ahead to several Phase II clinical trial results for depression and schizophrenia treatments expected in the second half of 2024 and into 2025.
The firm's analysis suggests that even one successful study out of the upcoming readouts could lead to significant value creation for Alto Neuroscience.
They estimate that a single program's peak sales could reach $1 billion, and applying a 2-3 times multiple and a greater than 50% probability of success upon Phase II success, the valuation could be between $1 billion and $1.5 billion. This valuation is markedly higher than Alto Neuroscience's current market capitalization of $400 million.
The price target of $33.00 reflects Jefferies' confidence in the company's strategic approach to drug development and the potential financial rewards from its pipeline success.
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