On Tuesday, JMP Securities initiated coverage on Solid Biosciences (NASDAQ:SLDB) stock, a gene therapy company specializing in Duchenne muscular dystrophy (DMD), with a Market Outperform rating and a price target set to $15.00.
Trading at $5.11, the stock shows potential upside according to analyst targets ranging from $12 to $28. The firm recognized Solid Biosciences as a leader in gene therapy, particularly noting its expertise in transgene optimization and advanced capsids.
The firm's valuation of the company, currently at $204.17 million market cap, is considered attractive and is justified by several factors. According to InvestingPro data, the company maintains a strong liquidity position with a current ratio of 7.85 and holds more cash than debt on its balance sheet.
First, the clinical-stage DMD asset of Solid Biosciences has the potential to create near-term value with dystrophin expression data expected in the first quarter of 2025. Historically, DMD gene therapy peers have reached market caps of approximately $475 million following proof of concept data.
Additionally, JMP Securities pointed out that Solid Biosciences' extensive preclinical cardiovascular pipeline, targeting large indications, has yet to be reflected in the company's current valuation. This aspect of the business could provide additional upside for the company's stock.
The firm also highlighted Solid Biosciences' significant capabilities in capsid engineering. The company possesses a range of proprietary capsids that are specifically engineered to avoid the liver, which could be valuable through strategic partnerships.
As an example of the potential value of such technology, the firm cited a recent deal in which Voyager Therapeutics (NASDAQ:VYGR) out-licensed a capsid for a neurological disease, fetching a $300 million value.
JMP Securities' positive outlook on Solid Biosciences is based on these combined components, suggesting a favorable future for the company's stock as it continues to develop its gene therapy technologies and potentially monetize its capsid engineering capabilities.
InvestingPro analysis indicates the stock is slightly undervalued, with a Fair overall financial health rating. Subscribers can access 6 additional ProTips and comprehensive financial metrics in the Pro Research Report, providing deeper insights into the company's potential.
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