Lexeo Therapeutics rises after attracting only buy ratings from Street brokerage firms

Lexeo Therapeutics (LXEO) shares rallied more than 7% in pre-market trade on Tuesday following bullish recommendations from Wall Street brokers initiating coverage after its initial public offering (IPO).

Analysts are optimistic about the biotech company’s pipeline and applaud its gene therapies addressing diseases with high unmet needs. Lexeo’s lead cardiac therapeutic candidate is LX2006, an adeno-associated virus (AAV)-based gene therapy designed for treating Friedreich’s ataxia (FA) cardiomyopathy.

JPMorgan analysts initiated coverage with an Overweight rating and a $20 per share price target.

“We expect additional phase 1/2 data mid-2024. We see Lexeo’s platform of gene therapy candidates offering a differentiated approach to target genetically driven diseases (i.e., treat the underlying genetic driver) for which there remain limited treatment options and substantial unmet needs,” analysts said in an initiation note.

“With continued de-risking of the candidates/approach expected over the next ~6-12 months, and with its market cap in the ~$250-300M range, we see the potential for upside to LXEO’s current valuation.”

RBC analysts’ price target of $22 per share is among the highest on the Street.

“We think this, coupled with an undemanding valuation (which we think is more a function of the macro vs fundamentals), further optionality on CNS and multiple upcoming catalysts create an opportunity,” analysts wrote.