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BofA and Morgan Stanley are both optimistic about Fractyl Health’s new IPO (NASDAQ: GOOD), citing the company’s novel approaches to treating diabetes and obesity, along with future catalysts.
BofA said key findings from a landmark study for its Revita endoscopic procedure in the treatment of type 2 diabetes are expected in the fourth quarter, with a 55% probability of success according to the banking model. The bank noted that Fractyl is also expected to start a study of Revita in the second half of 2024 as a maintenance therapy for people who have achieved weight loss on GLP-1 drugs but wish to stop them.
In addition to Revita, Fractyl is also developing a GLP-1-based gene therapy as a “one-off” treatment for obesity and type 2 diabetes. The company is expected to begin human clinical trials of the therapy in the first half of 2025, BofA said.
BofA set its price target on the stock at $26, with a buy rating.
Morgan Stanley is equally bullish on the stock, setting its price target at $18 with an overweight rating.
“While type 2 diabetes and obesity are highly competitive markets, we believe Revita’s potential to drive sustained metabolic improvement while minimizing treatment burden supports an attractive and differentiated profile,” Morgan analysts wrote Stanley in their note.