Jefferies begins coverage of Rocket Pharmaceuticals at “Buy”

What you need to know

• Jefferies initiated a "buy" rating on Rocket Pharmaceuticals based on the biotech firm's experimental gene therapies.
• Jefferies set the price goal at 29 dollars.
• The analysts said they were especially optimistic about Rocket's treatment for a rare genetic heart condition, which they believe could be a $1 billion opportunity for the company.

Rocket Pharmaceuticals’ (RCKT) shares jumped 5.5% Wednesday intraday after Jefferies started covering the biotech with a report. “buy” Rating based on the optimism of its experimental drug pipeline. Jefferies set its price target at $29 which is more than twice the current value.

In a client note, the analysts stated that Rocket Pharma was testing at least five gene therapy treatments to treat rare diseases. They focused their attention on RP A501 for Danon disease (AAV9) a genetic heart disorder with no treatment currently available.

They explained to me that it is a medicine “has a high 65-75% chance to succeed in a pivotal Phase II study” Next year could be an opportunity worth $1 billion for the company. They also believe that a positive outcome could increase the stock price by 100%. “implying a favorable risk/reward at $1.3B cap.”

Analysts argued that their price target of $29 is justified by a sum-of the-parts valuation based on discounted cash flows (DCF).

Rocket Pharmaceuticals’ investors, who haven’t seen much in recent months, will be pleased with the report. Last week, the shares hit a new low of more than 2 years. Even with today's advance, the stock has lost nearly 60% of its value in 2024.

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