Barclays downgrades Scholar Rock stock rating on valuation

Barclays has downgraded its rating on Scholar Rock (NASDAQ:SRRK) stock, shifting it from Overweight to Equalweight. This downgrade comes after the FDA approved apitegromab, also known as Isembyld. Barclays believes the risk-reward profile has improved due to the approval of this muscle-targeted therapy for spinal muscular atrophy.

The stock's price target has been raised to $58 from $55, reflecting the new net price of $310,000 annually, surpassing the previous assumption of $250,000. Analysts maintain a Strong Buy consensus, with price targets ranging from $55 to $84. The approval of Isembyld comes ahead of the September 30 target date. Despite the milestone, Scholar Rock remains unprofitable with a weak financial health score, underscoring the importance of solid commercial execution.

The Phase 3 SAPPHIRE study revealed that apitegromab improved the Hammersmith Functional Motor Scale by 2.2 points compared to the control. Analysts at TD Cowen, Truist Securities, Raymond James, and BMO Capital Markets have also updated their ratings and price targets for Scholar Rock, indicating positive sentiment towards the company's prospects.