After a huge stock slide this week, shares of Idenix Pharmaceuticals, Stifel Nicolaus advised clients that the company is now fairly valued.
Shares rose more than 5 percent in premarket trading Friday.
The stock slumped by 29 percent Thursday after the Cambridge, Mass., company revealed that placed a hold on testing of its potential hepatitis C drug, IDX184 because of the potential for heart damage in patients.
That puts the stock within the Stifel Nicolaus estimated fair value range of $5 to $6, analyst Stephen Wiley said. Wiley raised his rating on the stock to "hold" from "sell."
The company said no heart-related side effects have been specifically linked to the drug, although some have been seen in patients treated with IDX184 and standard drugs.
Two weeks ago, Bristol-Myers shut down a clinical trial of a similar hepatitis C treatment because a patient suffered heart failure during a clinical trial. That drugmaker has said it was not clear that the side effects in the trial were linked to the drug itself.
The FDA also placed a clinical hold on trials of IDX184 in 2010 because of concerns about the effects of the drug on the liver. It removed that hold in February. Idenix recently completed a mid-stage clinical trial of IDX184 and is preparing to report results from that trial. No patients are currently being treated with the drug.
"We believe this news likely limits additional downside risk over the near-term and, as a result, we are upgrading our rating of (Idenix) shares," Wiley wrote.
Shares of Idenix Pharmaceuticals Inc. sank $2.47 to $5.84 on Thursday, but bounced back above $6 Friday before the market opened.
Stifel Nicolaus makes a market in Idenix securities and expects to receive or intends to seek investment banking services compensation from Idenix.
