Jefferies has initiated coverage of Rocket Pharmaceuticals (RCKT) with a “buy” rating and a $29 price target, driven by optimism surrounding the company’s experimental gene therapies. This positive outlook sent RCKT shares up 5.5% intraday Wednesday.
Jefferies analysts highlighted Rocket Pharma’s pipeline of five or more gene therapy treatments for rare diseases. A key focus of their analysis is RP-A501 (AAV9), a treatment for Danon heart disease, a rare genetic condition with no current treatment options. This experimental therapy, according to Jefferies, has a high probability of success (65-75%) in its pivotal Phase II study next year. The analysts project that RP-A501 could represent a $1 billion market opportunity for Rocket Pharmaceuticals. Furthermore, a successful trial outcome could potentially double the company’s stock price, offering a favorable risk/reward profile at a $1.3 billion market capitalization.
The analysts’ $29 price target is based on a discounted cash flow (DCF) sum-of-the-parts (SOTP) valuation. This positive assessment provides a much-needed boost for Rocket Pharmaceuticals investors, who have seen the stock steadily decline this year, reaching a more than two-year low last week. Despite Wednesday’s gains, RCKT remains down nearly 60% year-to-date in 2024.
This positive outlook from Jefferies underscores the potential of Rocket Pharmaceuticals’ gene therapy pipeline, particularly RP-A501 for Danon heart disease. The upcoming Phase II trial results will be a critical catalyst for the company’s future prospects.
