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Missed out on Eli Lilly and Novo Nordisk? This pharma stock could be the next ‘big thing’

Missed out on Eli Lilly and Novo Nordisk? This pharma stock could be the next 'big thing'
Elmaz Sabovic

Given the pharmaceutical industry’s assured success driven by innovation and the development of medications targeting diverse healthcare issues, Eli Lilly (NYSE: LLY) and Novo Nordisk (NYSE: NVO) have emerged as dominant players, capturing significant market demand. 

However, Viking Therapeutics (NASDAQ: VKTX) appears primed to challenge this status quo.

Projections by Goldman Sachs indicate the anti-obesity market could exceed $100 billion by 2030, suggesting ample room for new entrants. Viking Therapeutics is positioned as a key player in this landscape with its promising weight loss drug, offering compelling investment opportunities in the industry.

What caused VKTX stock’s 360% YTD surge?

Viking’s obesity medication, VK2735, is currently undergoing phase 1 trials, suggesting it may take several years before it hits the market and contributes significantly to the company’s revenue. Nevertheless, investors are increasingly optimistic about the drug’s potential, buoyed by promising trial results thus far. 

Notably, the average weight loss over 13 weeks was 14.7%, comparable to Novo Nordisk’s Wegovy, which averaged 15% over 68 weeks. If VK2735 maintains its efficacy over the long term, it could emerge as a compelling option in the obesity treatment landscape, addressing the industry’s supply shortage. 

Viking Therapeutics stock has seen a rise over the last five trading sessions, driven by positive results from a study of its weight-loss drug on March 26. Since the beginning of 2024, VKTX stock has surged by 358.89%.

VKTX stock YTD price chart. Source: Google Finance
VKTX stock YTD price chart. Source: Google Finance

Wall Street bullish on Viking Therapeutics

Analysts are notably bullish on VKTX stock, evident in the ‘strong buy’ rating  on TipRanks derived from 9 buy recommendations and none for ‘hold’ or ‘sell.’ Six of these ratings were initiated in the last 30 days, underlining the recent resurgence in the stock.

The average target price is $108.50, signaling a potential upside of 31.88% from VKTX’s current price levels.

Analysts' price target for VKTX stock. Source: TipRanks
Analysts’ price target for VKTX stock. Source: TipRanks

There is a high dose of risk involved with VKTX stock

Viking Therapeutics faces high risk without an approved product, making it a volatile stock. While VK2735 shows promise, there’s uncertainty about regulatory approval.

To fund further development and trials, the company recently announced a $550 million common stock offering, indicating potential future offerings. 

Despite the stock’s upside potential, investors must weigh the risks, understanding that regulatory approval for VK2735, if achieved, could be a lengthy process.

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