Arrowhead adds 11% as SVB upgrades on compelling risk-reward setup
narvikk
Arrowhead Pharmaceuticals (NASDAQ:ARWR) jumped ~11% Wednesday after SVB Securities upgraded the RNAi therapeutics company to Outperform from Market Perform, citing an attractive risk-reward setup following the recent selloff.
The analyst Mani Foroohar points out that Arrowhead (ARWR) has lost ~35% YTD, underperforming the broader biotech and large-cap RNA/DNA therapy peers such as Alnylam (ALNY), Ionis (IONS) and Moderna (MRNA).
"This leaves ARWR trading at ~$2.8B market cap, a discount to the $3.3B at which Dicerna was acquired by Novo Nordisk," (NVO) Foroohar explained, referring to Denish pharma's deal for the rival RNAi therapeutics as the most recent M&A standard in the subsector.
According to the analyst, this sets up a compelling risk-reward profile for ARWR, ahead of upcoming data catalysts for its pulmonary portfolio and potential licensing/ partnership deals that could drive upside and address concerns on its financial position and cash burn. 
SVB Securities raises the price target on the stock to $35 from $21 to imply a ~33% upside from Tuesday's close. 
Read: Seeking Alpha contributor Stephen Ayers shared broadly similar views on Arrowhead (ARWR) on Tuesday in issuing a Strong Buy rating on the stock.