Shares of Nektar Therapeutics (NKTR, Financials) rose 26.21% to $0.50 as of 11:36 a.m. ET Friday after Jefferies upgraded the stock from Hold to Buy and increased its price target from $1.00 to $2.00. The firm's revised rating comes ahead of the expected second-quarter topline data from a Phase 2b study of Rezpeg, Nektar's experimental treatment for atopic dermatitis.

Warning! GuruFocus has detected 7 Warning Signs with NKTR.

The company has lost over 63% of its market value in the past six months, but Jefferies analyst Roger Song cited encouraging results from a Phase 1b trial, which showed a favorable safety and efficacy profile for Rezpeg, an IL-2 Treg stimulator. Song said the drug's novel mechanism of action sets it apart from other current and pipeline treatments in the space.

According to Jefferies, the significant negative enterprise value and high liquidityreflected in a current ratio of 4.26support a more favorable risk-reward scenario. Nektar's market capitalization is currently around $93 million.

The firm also pointed to Nektar's cash position of $269.1 million at the end of 2024, which is expected to fund operations through the fourth quarter of 2026. The company recently beat consensus earnings expectations, reporting a fourth-quarter 2024 earnings per share of $0.03, compared with an anticipated loss of $0.16. However, revenue for the quarter came in slightly below forecast at $29.2 million versus $29.81 million.

Nektar has entered a $75 million equity distribution agreement to support its financial flexibility. The biotech firm is progressing with clinical development for Rezpeg, which is also being studied for alopecia areata and Type 1 diabetes.

Other analysts have issued varying outlooks. Oppenheimer raised its rating to Outperform with a $6.00 price target, while BTIG maintained a Neutral stance with a $4.00 target.

This article first appeared on GuruFocus.

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