Citi sees up to 410% upside in 2 biotech stocks: is the risk worth it?

Citi analyst Yigal Nochomovitz sees enormous upside in two biotech stocks, but those forecasts reveal as much about risk as potential reward.

Nochomovitz has a $7 target on Biomea Fusion, implying about 410% upside from the price used in Citi’s call, while his $57 Syndax Pharmaceuticals target points to roughly 190%.

The cases are fundamentally different. Biomea is a clinical-stage company approaching a decisive obesity-drug readout.

Syndax already sells approved cancer medicines and is generating rapidly growing revenue.

Biomea’s 410% call hinges on one obesity readout

Citi rates Biomea a Buy and has placed the stock on an “upside 90-day catalyst watch” ahead of Phase 1 data for BMF-650, its oral GLP-1 obesity candidate.

Nochomovitz told TipRanks that BMF-650 could offer a “safer, but equally effective” oral alternative to existing GLP-1 therapies.

Biomea expects initial 28-day weight-reduction data from its GLP-131 study during the third quarter.

The payoff is amplified by Biomea’s depressed valuation.

Encouraging human data could materially change expectations for a company whose market value assigns limited credit to BMF-650.

But the risk is stark.

BMF-650 remains in Phase 1. Preclinical studies showed weight loss of up to roughly 15% in non-human primates, but animal results do not guarantee comparable efficacy or tolerability in people.

Biomea also has no approved commercial product. It ended June with $35.2 million in cash, equivalents and restricted cash, and says its runway extends only into the second quarter of 2027.

That leaves financing and dilution as additional risks.

Syndax has sales, but Citi remains unusually bullish

Its two FDA-approved medicines, Revuforj and Niktimvo, helped support second-quarter revenue of $72.8 million, up 92% year over year.

Revuforj contributed $54.7 million, while Syndax recognised $18.1 million of collaboration revenue from Niktimvo.

The company nevertheless posted a $49.4 million quarterly net loss.

Citi’s thesis partly rests on patients staying on Revuforj for longer.

Nochomovitz told TipRanks that growth should increasingly “compound through longer treatment duration rather than depend solely on new starts.”

He also expects a data-heavy second half, including revumenib and axatilimab readouts, to strengthen the franchise.

Yet Citi’s $57 target sits near the bullish edge of Wall Street.

UBS analyst David Dai cut his target to $33 from $37 on Aug. 21 while retaining a Buy rating.

JPMorgan reduced its target to $40 from $44, while H.C. Wainwright lowered its forecast to $38 from $40.

Huge upside also signals huge uncertainty

For Biomea, the main risks are clinical and financial.

If BMF-650 produces compelling human weight-loss and tolerability data, the stock could rerate sharply because expectations are low.

Disappointing results could weaken a central pillar of Citi’s valuation argument while increasing pressure on Biomea’s cash resources.

Syndax faces a different test: commercial execution.

It must show Revuforj can expand through longer treatment duration, broader indications and deeper market penetration while its pipeline produces data strong enough to support future growth.

Citi believes that can happen. Lower targets from UBS, JPMorgan and H.C. Wainwright show there is less agreement on how much investors should pay for that opportunity.