February 2, 2025
Medications known as glucagon-like peptide 1 (GLP-1) receptor agonists are taking over the healthcare industry. While you may not be familiar with the term "GLP-1," I'd wager you'll recognize some of the most popular ones on the market today, including Ozempic, Wegovy, Mounjaro, and Zepbound. Each of these GLP-1 treatments are developed by either Novo Nordisk or Eli Lilly .
Although Novo Nordisk and Eli Lilly are the main players in the GLP-1 arena, a number of other pharmaceutical companies are vying for a spot -- and Wall Street analysts appears particularly bullish on one candidate, Viking Therapeutics (NASDAQ: VKTX) .
As I write this, shares of Viking trade for roughly $34. However, the consensus price target among 15 analysts following Viking and tracked by Yahoo! Finance is $110 -- implying more than 220% upside from current levels.
Is that price target realistic? Should you buy Viking Therapeutics stock before it goes to the moon?
Viking has a number of different clinical studies ongoing with its lead GLP-1 candidate, VK2735, which is a dual GLP-1/GIP agonist that is being tested to treat obesity. (GIP is glucose-dependent insulinotropic polypeptide.) In my opinion, Wall Street is intrigued by Viking because the company is developing different versions of VK2735, one of which is an oral tablet.
This is particularly interesting because mainstream obesity drugs such as Wegovy and Zepbound are administered via injection. An oral tablet could open up new doors for patients who seeking treatment for obesity care, but may not be keen on injections.
In early January, Viking announced that it is in the early stages of initiating a 13-week phase 2 trial for the oral form of VK2735. While this is exciting news on the surface, investors need to zoom out and think about the bigger picture.
The reality is that Viking has a long road ahead. While its clinical trials have so far demonstrated encouraging data, the company has a lot to prove before the Food and Drug Administration (FDA) would approve VK2735.
Furthermore, should the oral form of VK2735 actually be approved sometime in the next year, Viking would then need to figure out how to mass-produce and market the drug to make a splash in the market. Until these things happen, Novo Nordisk and Lilly will continue competing heavily against one another and invest in their own next-generation GLP-1 medications -- some of which include oral GLP-1 formations.
A couple of months ago, healthcare equity research analyst Jared Holz from Mizuho spoke about Viking potentially being an acquisition target. During his discussion, Holz suggested that Viking could fetch $15 billion -- or possibly more -- in a buyout.
As a proxy, Lilly's Mounjaro and Zepbound are on track for $14.7 billion in combined sales for 2024 -- essentially in the ballpark to what Holz thinks Viking could be worth. Should Viking reach Wall Street's target price of $110, the company would boast a market capitalization of roughly $12 billion. Considering Viking is still a development-stage operation with no commercial scale yet, that valuation might seem a bit high.
However, I think the math actually checks out considering what could happen with approved weight loss drugs when you consider competitors and Holz's proposed buyout scenaio.
Yet it's important for investors to realize that Viking stock has been on a tear for the last year. Over the last 12 months, shares of Viking have gained 58% -- more than double that of the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite (NASDAQINDEX: ^IXIC) . When you account for the fact that Viking stock has been in a downward spiral over the last couple of months, there's an argument to be made that the stock was egregiously overbought in 2024 -- and might still be.
To me, Viking is still very much a speculative opportunity. While I see Wall Street's price target as some form of validation of Viking's potential, there are still a lot of unknowns around clinical trial data and time to market if the FDA approves any of the company's treatments.
For these reasons, I would only advise buying shares of Viking if you're an investor with a high appetite for risk and are willing to tolerate pronounced volatility. If that's not a recipe you enjoy, you're better off investing in established GLP-1 opportunities such as Novo Nordisk or Eli Lilly.
Before you buy stock in Viking Therapeutics, consider this:
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