After Synergy Pharmaceuticals Inc (NASDAQ:SGYP) yielded positive Phase 3 top-line data in the first of two pivotal Phase 3 trials in adults with irritable bowel syndrome (IBS-C) for its leading asset plecanatide. Though shares initially surged forward 12% in response to the favorable results, yesterday the stock found itself on a 5% dip, with Fox News pointing to cautious investor sentiment, careful not to let eagerness run too unbridled.
Roth Capital analyst Michael Higgins joins the original investor wave of enthusiasm and on back of the successes reiterates a Buy rating on shares of SGYP with a $6.50 price target, which represents a 31% increase from where the stock is currently trading.
However, the analyst though positive is not out leading a bullish parade of confidence just yet, explaining, ” coming into today, plecanatide had demonstrated efficacy scores in CIC that were lower than that of Linzess (linaclotide), but with more favorable diarrhea rates. Given the stock’s reaction, seems investors believe this ‘reputation’ has been solidified with the IBS-C results; but we believe that may be inaccurate, if not premature. In our view, too much emphasis may be placed on the difference in the “absolute” placebo-subtracted rates (-23.9%) in this IBS-C trial rather than the “relative” placebo-subtracted rates, which narrows the efficacy gap (0.4X).”
Moving forward, “In the second Phase 3 in IBSC by YE we’ll look to see if its’ profile diverges further from Linzess (lower efficacy but lower diarrhea rates) or if the gaps narrow […] We continue to look for plecanatide’s approval in late January in chronic idiopathic constipation (CIC),” Higgins concludes.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, Michael Higgins is ranked #4,126 out of 4,273 analysts. Higgins has a 33% success rate and faces a loss of 15.8% in his annual returns. However, when suggesting SGYP, Higgins gains 14.2% in average profits on the stock.
TipRanks analytics indicate SGYP as a Strong Buy. Out of 5 analysts polled by TipRanks in the last 3 months, 4 are bullish on SGYP stock and 1 remains sidelined. With a return potential of nearly 115%, the stock’s consensus target price stands at $10.60.
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