Citi Sees Prime Medicine Stock Jumping 47.9%, FDA Nod Boosts

Citi upgrades Prime Medicine to buy, forecasts 47.9% stock surge amid positive program updates and FDA milestones.

By Bill Bullington

5/16, 10:18 EDT
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Key Takeaway

  • Citi upgrades Prime Medicine to buy with a 47.9% potential upside, citing positive quarterly results and advancements in gene editing programs.
  • Despite a 23.7% decline this year, Prime's stock surged over 37% this month, supported by FDA clearance for its investigational drug PM359.
  • Analyst consensus suggests a significant growth potential for Prime Medicine, with an average price target of $14.56, indicating a 115.38% upside.

Prime Medicine's Market Rebound

Citi analyst Samantha Semenkow has upgraded Prime Medicine to buy from neutral, maintaining a price target of $10 per share, indicating a potential upside of 47.9% from the stock's recent close. Despite a 23.7% decline this year, Prime's shares have seen over a 37% increase this month, buoyed by positive quarterly results and updates on its hematology, immunology, liver, ocular, and neuromuscular programs. Semenkow notes the advancement of several in vivo programs into lead optimization or IND-enabling studies within the next 12-24 months as a positive sign, despite their clinical entry still being years away. The FDA's clearance of Prime's investigational new drug application for PM359, aimed at treating chronic granulomatous disease, is highlighted as a key milestone. However, Semenkow remains cautious about Prime's cash position, anticipating a need for fundraising in the next 12 to 18 months, while also seeing potential non-dilutive cash sources from business development efforts.

Financial Performance and Analyst Perspectives

Prime Medicine reported a quarterly loss of 44 cents per share, slightly better than the forecasted 45 cents per share loss according to FactSet. Research and development expenses were $37.8 million, below the expected $40 million. The company also reported a significant increase in cash and cash equivalents compared to the end of the previous year. The analyst consensus on Prime Medicine includes 11 ratings, with a mix of strong buy, buy, and hold recommendations, and no underperform or sell ratings. The average price target stands at $14.56, suggesting a 115.38% upside, with the highest target at $20.00 and the lowest at $9.00.

Broader Market Analyst Calls

Other significant analyst calls include upgrades and reiterations across various sectors. Citi's upgrade of Prime Medicine is part of a broader narrative of analyst activities, including Piper Sandler's reiteration of Nvidia as overweight, JPMorgan's continued overweight rating on Netflix, and Wolfe's upgrade of Intel to peer perform. Additionally, Piper Sandler's upgrade of Quaker Houghton to overweight and Truist's upgrade of Coterra Energy to buy reflect optimism in specialty chemicals and energy sectors, respectively. Analysts also reiterated positive outlooks on companies like Palo Alto Networks, Robinhood, FedEx, and Dell, indicating a diverse range of sectoral interests and investment opportunities.

Street Views

  • Samantha Semenkow, Citi (Bullish on Prime Medicine):

    "While Prime’s in vivo programs are still several years from entering the clinic, we find it encouraging that many are advancing into lead optimization or IND-enabling studies over the next ~12-24 months... At current valuations, we see favorable risk reward for PRME."