JPMorgan says buy this immunology stock primed to rally nearly 40%

Published Tue, Feb 20 20241:01 PM ESTUpdated Tue, Feb 20 20241:14 PM EST

Immunovant could emerge as a key player in the autoimmune space, according to JPMorgan. The bank initiated coverage of the biotech stock at an overweight rating, also setting a price target of $51. That implies shares of Immunovant could rally more than 37% from their Friday closing price of $37.13. Immunovant stock has slid 9% so far this quarter. But that is to be expected, according to analyst Brian Cheng. "While we expect choppiness in IMVT shares near term, driven by competitor data flows, we think IMVT's longer-term, de-risked outlook holds opportunities given the multiple clinical and strategic catalysts by 1H25," he wrote. IMVT YTD mountain IMVT YTD chart As a key catalyst, the analyst underscored Immunovant's stats as one of the key players using anti-neonatal Fc receptor technology, or anti-FcRn technology, to treat autoimmune diseases. Approximately half of his price target is derived from specific opportunities targeting Graves' and thyroid eye disease. "While we acknowledge the number of FcRn-targeted competitors in the market, we believe the company is well positioned, as: (1) its line of subcutaneously self-administered products may stand out with a potential edge on efficacy and ease of use that can be helpful in markets where competitors are already ahead, and (2) it is moving strategically in spaces like thyroid / endocrine where it can be the first mover," he wrote. An additional tailwind for the stock comes from a clinical trial for IMVT-1402, an injectable treatment that reduces the immunoglobulin G antibody, which are associated with inflammation and autoimmune disease. "We think IMVT's portfolio can be tailored to its advantage and pipeline's performance," Cheng said. "IMVT, in our view, still has significant room for growth with '1402." Meanwhile, the backdrop for mergers and acquisitions and partnerships looks bright within the biotechnology space, with Cheng alluding to recent agreements between Roche and Telavant and Merck and Prometheus . Immunovant's portfolio looks attractive and could be a prime candidate for potential partnerships, the analyst said. — CNBC's Michael Bloom contributed to this report.