On Monday, Truist Securities adjusted its outlook on Compugen shares (NASDAQ:CGEN), a biotechnology company focused on cancer immunotherapy treatments. The price target was lowered to $4.00 from the previous $5.00, but the firm maintained a Buy rating on the stock.
The revision follows the announcement that Compugen's combination therapy involving COM701 and COM902 will not proceed in a challenging immunotherapy indication, colorectal cancer with liver metastases. The analyst from Truist Securities expressed disappointment at the development, noting the inherent difficulties in drug development despite the use of AI for identifying potential drug targets.
Compugen's presence at the upcoming American Society of Clinical Oncology (ASCO) meeting is now considered a non-event for the company. The analyst has adjusted the price target to reflect anticipated future product revenues solely from the company's ovarian cancer treatments.
Despite the setback in the colorectal cancer program, Compugen reportedly has other collaborative projects derived from its technology platform. These collaborations are expected to achieve near-term milestones and, according to company management, extend Compugen's cash runway into 2027. The analyst's comments suggest that these factors provide some positive prospects for the company's financial sustainability.
InvestingPro Insights
Compugen's financial health and market performance provide a mixed picture for investors. On the positive side, the company's gross profit margins are impressive, with the last twelve months as of Q4 2023 showing a high 94.01%, according to InvestingPro data. This is indicative of the company's ability to maintain costs effectively relative to its revenue. Furthermore, Compugen holds more cash than debt on its balance sheet, which is a reassuring sign of financial stability.
On the other hand, the company is not expected to be profitable this year, as reflected in the negative P/E ratio of -9.95. Moreover, the company's stock price has been quite volatile, with a significant price uptick of 226.78% over the last six months, yet a decline of 12.08% in the past three months. Investors may wish to consider these factors, including the company's rapid cash burn, when evaluating the stock's potential.
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