After Crashing 27% within the Previous Month, Is Viking Therapeutics Inventory a Cut price Purchase Proper Now?

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There is a rising variety of firms getting into the burden loss house, specializing in GLP-1 medicine which might be recreation changers for his or her companies. And one in every of them is Viking Therapeutics (NASDAQ: VKTX), which has a promising GLP-1 remedy in improvement that traders are hopeful will generate billions in income for the modestly sized healthcare firm. It could even result in an acquisition.

Up to now month, nevertheless, pleasure round Viking has cooled, significantly. Throughout November, the inventory fell by 27%, hitting lows it hasn’t been at in months. At a less expensive valuation, has Viking Therapeutics turn out to be too good of a purchase to go up proper now?

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Though it appears like there could also be some mounting pessimism surrounding Viking Therapeutics inventory not too long ago, its shares are nonetheless up greater than 180% this yr, as of the top of final week. Traders might merely be cashing out some earnings heading into the shut of 2024.

And as information from different GLP-1 drugmakers comes out, that might additionally function a reminder that though it has a promising product in its pipeline in VK2735, even upon approval, it might face some critical competitors. Past Novo Nordisk and Eli Lilly, that are the leaders within the GLP-1 house proper now with high medicine corresponding to Ozempic, Wegovy, Mounjaro, and Zepbound of their portfolios, there are additionally firms corresponding to Amgen and Pfizer which have been creating their very own medicine. And there additionally many smaller drugmakers trying to make a giant play in what could possibly be an enormous anti-obesity drug market price a staggering $100 billion or extra (by 2030), in keeping with estimates from Goldman Sachs.

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Traders may additionally be involved that the brand new incoming Republican authorities might take a harder stance on weight reduction medicine, which might affect approvals and protection of a lot of these remedies.

Whereas Viking’s inventory has fallen of late, traders should not neglect that at $6 billion, its market cap is excessive, contemplating this can be a firm which does not generate any income proper now. It has accomplished section 2 trials for VK2735, which have proven that the drug can assist individuals lose round 14.7% of their physique weight over a 13-week interval. It additionally has a promising weight reduction capsule in improvement, which could possibly be a fair greater recreation changer as it might be a extra tenable choice for individuals who do not wish to use injectables.

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