On Monday, Barclays (LON:BARC) maintained its Overweight rating on Relay Therapeutics (NASDAQ:RLAY) and raised the stock's price target to $17.00 from $14.00. This adjustment comes after a positive data update released earlier in the day regarding RLY-2608, the company's drug candidate for advanced HR+/HER2- breast cancer.
The updated price target reflects an increased confidence in the probability of success for RLY-2608 following the recent data update. Barclays cited the improved likelihood of the drug's success and a slight increase in the expected penetration rate as key reasons for the price target revision.
In addition to the positive outlook on RLY-2608, Barclays also noted adjustments to their financial model for Relay Therapeutics due to the potential partnering of the FGFR2 asset, which is another drug in the company's pipeline. The firm's reevaluation of Relay's portfolio led to the decision to raise the price target.
The Overweight rating indicates that Barclays expects the stock to perform better than the average return of the stocks analyzed by the firm. The price target increase to $17.00 suggests that Barclays sees potential for the stock's market price to rise from its previous level.
Relay Therapeutics' stock price target upgrade by Barclays follows the company's demonstration of progress in its drug development efforts, which could be significant for investors monitoring the biotechnology sector and Relay's position within it.
In other recent news, Relay Therapeutics has reported significant progress in its ReDiscover study evaluating RLY-2608, a potential treatment for metastatic breast cancer.
The study revealed a 33% objective response rate across all patients and a 53% rate in those with kinase mutations. The company plans to initiate a pivotal study in 2025, alongside progress with its triplet combination treatments.
Additionally, Relay Therapeutics has made strides in its portfolio, initiating a monotherapy solid tumor dose expansion cohort by the end of 2024, and a vascular malformations study in 2025. The company is also seeking a global commercialization partner for lirafugratinib, with clinical starts for Fabry disease and NRAS programs anticipated in 2025.
In terms of financials, Relay Therapeutics reported a cash position of approximately $688 million as of the second quarter of 2024, expected to fund operations into 2026. However, the company's partnership with Roche (LON:0QQ6) was recently terminated, halting further financial benefits or milestone payments.
Analysts have reacted to these developments. BofA Securities revised its price target for the company to $20.00, while maintaining a Buy rating. However, H.C. Wainwright reduced its price target to $18.00, also maintaining a Buy rating. Meanwhile, Barclays upgraded the company's stock to Overweight, and Oppenheimer lowered its price target to $25, but maintained an Outperform rating.
InvestingPro Insights
Amid Barclays' optimistic outlook on Relay Therapeutics, InvestingPro data and tips offer a multifaceted view of the company's financial health and market performance. With a market capitalization of $1.28 billion, Relay Therapeutics holds more cash than debt on its balance sheet, which is a positive sign of financial stability. However, analysts have expressed concerns, with 8 revising their earnings downward for the upcoming period, reflecting potential challenges ahead.
InvestingPro data reveals a striking revenue growth of over 3637% in the last twelve months as of Q2 2024, indicating a significant increase in sales. Despite this growth, the company suffers from weak gross profit margins, with a gross profit margin of -836.59% in the same period, which could be a point of concern for investors. Relay's stock price has also been quite volatile, with a 1-week price total return of -8.1% as of the latest data, suggesting that investors may need to brace for potential short-term fluctuations.
For those considering an investment in Relay Therapeutics, it's worth noting that the company is quickly burning through cash and analysts do not anticipate it will be profitable this year. Additionally, the company does not pay a dividend to shareholders, which may influence the investment decisions of those seeking regular income streams.
InvestingPro offers a wealth of additional insights, with numerous tips available for Relay Therapeutics, providing deeper analysis and forecasts that could guide potential investment strategies. To explore these further, visit InvestingPro for Relay Therapeutics for a comprehensive set of tips and metrics.
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