On Friday, RBC Capital Markets adjusted its outlook on 89bio Inc . (NASDAQ:ETNB) shares, a clinical-stage biopharmaceutical company, by reducing the price target to $13.00 from the previous $14.00. Despite this change, the firm maintained its Sector Perform rating on the company's stock.
The adjustment comes as 89bio's Phase III MASH studies are reported to be on track, although research and development costs may be slightly higher than initially anticipated.
RBC Capital Markets acknowledges the potential of 89bio's pipeline drugs, pegoza and FGF21, to treat fibrosis and their possible synergistic effects with GLP-1 therapies.
However, the firm notes that while the development of these treatments is progressing, it will require time to fully realize their market potential.
The analyst from RBC Capital Markets suggests that the market opportunity for 89bio's drugs could face constraints due to the increasing use of GLP-1 therapies.
Upcoming results from competitors such as Eli Lilly (NYSE:LLY) and Novo Nordisk (NYSE:NVO), particularly from the Phase III ESSENCE study expected in the second half of 2024, could further delineate the competitive landscape.
The new price target reflects model adjustments made by RBC Capital Markets. The firm anticipates that 89bio's stock may trade in line with the market in the near term, as investors assess the company's progress and the evolving dynamics of the market for fibrosis treatments.
InvestingPro Insights
As 89bio Inc. (NASDAQ:ETNB) navigates the competitive landscape of fibrosis treatments, certain financial metrics and analyst actions may offer additional context for investors. According to InvestingPro data, 89bio holds more cash than debt on its balance sheet, which could provide some financial flexibility as it funds ongoing research and development. Additionally, the company's liquid assets exceed short-term obligations, indicating a stable short-term financial position.
However, challenges remain, as 89bio has been marked by weak gross profit margins and has not been profitable over the last twelve months. Moreover, analysts do not expect the company to turn a profit this year. On a more positive note, three analysts have revised their earnings estimates upwards for the upcoming period, suggesting some optimism about the company's future performance.
For investors looking to delve deeper into 89bio's financial health and future prospects, there are additional InvestingPro Tips available, which can be found at Investing.com/pro/ETNB. For those considering an InvestingPro subscription, use the coupon code PRONEWS24 to receive an extra 10% off a yearly or biyearly Pro and Pro+ subscription. There are 6 more InvestingPro Tips available, providing a comprehensive analysis for informed investment decisions.
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