TLDR
- Jones Trading upgraded CervoMed (CRVO) from Hold to Buy with a $15 price target following positive open label extension study results
- CervoMed stock surged nearly 187% in the past week with analyst targets now ranging from $10 to $16
- Multiple analysts including Chardan Capital and Brookline Capital also upgraded CRVO based on promising neflamapimod data for dementia with Lewy bodies treatment
- Company has solid financials with $47 million cash reserves and no debt
- CervoMed has 4.2 years of cash runway at current burn rate of $11 million per year
CervoMed received a significant boost this week as Jones Trading upgraded the company’s stock from Hold to Buy, setting a new price target of $15. The upgrade came on Thursday following encouraging data from CervoMed’s open label extension study for its drug neflamapimod.
The positive results have sparked remarkable momentum in CRVO shares. The stock has surged nearly 187% in the past week alone.
Jones Trading isn’t the only firm taking notice of CervoMed’s progress. Several other analysts have also upgraded the stock recently.
Chardan Capital Markets changed their rating from Neutral to Buy with a $14 price target. Brookline Capital Markets raised their rating from Hold to Buy with a target of $16.
Boral Capital joined the trend by upgrading CRVO from Hold to Buy with a $10 target. These upgrades followed discussions with company management and reviews of trial results.
According to InvestingPro data, analyst price targets now range from $10 to $16. This suggests potential upside from the current trading price of $6.48.
Promising data for treating dementia
The catalyst for these upgrades appears to be promising data from CervoMed’s neflamapimod trials. This drug is being investigated for treating dementia with Lewy bodies (DLB), a progressive neurological disorder.
Recent findings from the open-label extension phase showed increased plasma drug concentrations and improvements in clinical assessments. Jones Trading anticipates this development will attract more fundamental investors in the coming months.
The company has faced some challenges in its trials. The double-blind phase did not show notable differences compared to a placebo.
This lack of clear results may have been due to lower bioavailability from an older batch of the drug. CervoMed is addressing this issue by considering a higher dose for future studies.
Despite these challenges, the company remains optimistic about the drug’s efficacy at higher plasma concentrations. Further data is expected in early 2025.
The company maintains a strong balance sheet
Financially, CervoMed appears to be in a solid position. With a market capitalization of $52.58 million, the company maintains a strong balance sheet.
CervoMed has cash reserves of $47 million and no debt as of September 2024. At the current annual burn rate of $11 million, this gives the company a 4.2-year cash runway.
This extended runway provides CervoMed with ample time to develop its business and advance its drug candidates. However, if more funding becomes necessary, shareholders could face some dilution.
The company’s cash burn represents about 22% of its market value. This means if CervoMed needed to sell shares to fund another year of operations, it could result in notable dilution at current prices.
CervoMed’s revenue growth has been impressive, increasing by 116% over the past year. This growth helps justify the 97% increase in cash burn during the same period.
Investors should mark March 28 on their calendars. That’s when CervoMed is scheduled to release its next earnings report, which could provide additional insights into the company’s development progress.
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