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Agios Pharmaceuticals, Inc.Stock Is an Analyst Darling for Good Reason

Chris Lau

As Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) closes at new highs, analysts are gushing over the company’s prospects. The company earned eight buy recommendations and just one hold in the last four months. What is it about Agios stock  that has the experts bullish on the company?

Markets speculated that Celgene Corporation (NASDAQ:CELG) would buy Agios or Jounce Therapeutics, Inc. (NASDAQ:JNCE) back in April. The rationale is that Celgene wants to accelerate its revenue growth through acquisitions. Current shareholders are unhappy with Celgene’s growth rates from its existing stable of drugs.

Despite the company’s array of potential drugs in Multiple Myeloma, CELG stock is pricing in a stagnant future. Though Jounce stock slumped last month in May a Wells Fargo downgrade, the analyst enthusiasm for Agios is keeping the stock higher.

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Agios develops drugs that target cellular metabolism for treating patients with cancer and rare genetic diseases.  It invests $50 – $60 million annually, has over 400 employees, and has over 10 clinical trials targeting six diseases. Agios’ current clinical portfolio has the potential to make over $2 billion in the AML, or Acute Myeloid Leukemia market.

Investors should, as usual, exercise caution when considering the TAM (total addressable market) potential a biotech company. If Agios stumbles on any of its clinical studies, that market potential drops.

Regulatory changes also have an impact on the drug market’s potential. Still, Trump’s ‘Right to Try Act’ would only help AGIO shareholders. By speeding up the availability of unproven but safe enough drugs, the time to market for Agios’ drugs shortens.

2018 Milestones and Agios Stock

Agios initiated a number of key studies in the year. IT started a Phase 3 trial for AML by combining ivosidenib and enasidenib. Its study in low-grade glioma perioperative with ivosidenib and AG-880 started this year.

More recently, its AG-270 Phase 1 dose-escalation trial in MTAP-deleted cancers is piquing investor interests. Shares of companies in the area of gene-editing jumped in recent months as investors became drawn to the science behind the product.

CRISPR Therapeutics AG (NASDAQ:CRSP) is already up around two-fold in 2018 on the excessive enthusiasm that it will attract more funding and bring in more investors.

Agios Has Ambitious Goals for 2018

Agios has a solid vision for this year that includes getting at least three approved medicines to market. For example, it wants to commercialize ivosidenib for R/R AML in the U.S.

Within its deep pipeline, Agios has a co-promotion deal with Celgene in four programs: IDHIFA, AG-881, AG-270, and in the Metabolic IO Research Programs. Management has high expectations for its products: the company mentioned its “expectations” 35 times on its investor day conference.

agios

Source: Agios Pharmaceuticals

Target Price for Agios Stock

Of the seven targets set on AGIO stock, the average price target is $95.57, which is close to its closing price of $96.86 on June 1. Note that tipranks reports an average price target of $108.40 from analysts, implying an upside of 12 percent.

The difference between the two sites is due to the availability of analyst price target data. Conversely, users on finbox.io modeled a $55.76 average fair value, implying a 42 percent downside.

AGIO Price Target

AGIO Price Target (source: <a href="https://finbox.io/AGIO?ai=oj32jt3&pi=fnbox">finbox.io</a>)

Takeaway

As with all new age biotech companies, the bulls in Agios stock could run out of steam if the company’s $1.63 a share loss in the first quarter, reported on May 4, shakes their confidence.

The revenue of just $8.76 million, down 16.7 percent from last year, could also give bears a reason to short-sell the stock. At a modest short float of 10 percent, the bullish momentum outweighs the bearish one. Plus, with no debt and a bright potential for new, innovative products, AGIO stock is suitable for speculative investors.

Disclosure: Author holds no shares in any of the companies mentioned.

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