On Friday, Gritstone bio (NASDAQ:GRTS) experienced a change in its stock outlook as Jones Trading adjusted its price target on the company's shares to $5.00, a significant decrease from the previous $10.00 target. Despite this reduction, the firm has kept a Buy rating on the stock.
Gritstone bio recently announced its first-quarter earnings for 2024, confirming that it has sufficient cash to operate until the fourth quarter of 2024. Moreover, the company expects to release Phase 2 data for its MSS-CRC treatment in the third quarter of 2024. Jones Trading has expressed caution regarding the upcoming Phase 2 results, referencing an interim analysis in early April which did not provide a clear indication of the trial's success.
The lowered expectations are partly due to the initial GRANITE trial data, which led to a decrease in the probability of success (POS) in MSS-CRC to 20% from the previously estimated 35%. This reassessment comes in light of the interim look that did not fully reassure investors about the potential topline results.
Furthermore, the impact of recent financial activities by Gritstone bio has been factored into the new price target. The company's first-quarter public offering and the issuance of pre-funded warrants have led to dilution, necessitating a revision of the price target.
In summary, Jones Trading has revised its price target for Gritstone bio to $5.00 from $10.00 but continues to recommend a Buy rating on the stock. The firm anticipates a more definitive outcome from the Phase 2 trial, with an expected median control arm progression-free survival (PFS) of 10-11 months, which will be reported in the third quarter of 2024.
InvestingPro Insights
As Gritstone bio (NASDAQ:GRTS) navigates through a critical phase with its MSS-CRC treatment, recent data from InvestingPro provides additional context for investors monitoring the company's performance.
With a market capitalization of $84.1 million, Gritstone bio's financial health and stock volatility remain areas of interest. The company's high Price/Book ratio of 7.46, as of the last twelve months leading up to Q1 2024, suggests a premium valuation compared to its book value. Moreover, the revenue growth has been modest at 2.93% during the same period, indicating slow progress in increasing sales.
InvestingPro Tips highlight that Gritstone bio's stock generally trades with high price volatility, which could be a concern for risk-averse investors. Moreover, the company has been quickly burning through cash, a situation that investors should monitor closely as it moves towards the anticipated release of Phase 2 data. For those seeking a more comprehensive analysis, there are an additional 9 InvestingPro Tips available which could offer deeper insights into Gritstone bio's financial health and stock performance.
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