Viking Therapeutics Stock: Buy or Sell Before Q3 Earnings?

Viking Therapeutics VKTX is set to report third-quarter earnings on Oct. 23, after market close. Since the company lacks a marketed drug in its portfolio, we do not expect it to record revenues. The Zacks Consensus Estimate for earnings is pegged at a loss of 24 cents per share.Estimates for 2024 loss per share have risen slightly from 99 cents to $1.00 in the past 60 days. Over the same timeframe, loss per share estimates for 2025 have narrowed from $1.48 to $1.46. Image Source: Zacks Investment ResearchStay up-to-date with all quarterly releases: See Zacks Earnings Calendar.VKTX’s Earnings Surprise HistoryThe biotech firm’s performance has been mixed over the past four quarters. Its earnings beat estimates in two of the trailing four quarters, missed once and met in the other, delivering an earnings surprise of 5.56%. Image Source: Zacks Investment ResearchEarnings Whispers on VKTX’s Upcoming ResultsOur proven model does not predict an earnings beat for Viking this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not thecase here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.Viking has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Factors Shaping VKTX’s Upcoming ResultsWithout any approved/marketed product in its portfolio, the focus is expected to be on updates related to Viking's pipeline, which includes three candidates — VK2735 (for obesity), VK2809 (for non-alcoholic steatohepatitis [NASH]) and VK0214 (for X-linked adrenoleukodystrophy [X-ALD]).Earlier this month, VKTX reported positive results from a phase Ib study evaluating VK0214 in patients with adrenomyeloneuropathy, a form of a rare neurogenerative disease called X-ALD. The study met its primary endpoint — a once-daily dose of VK0214 over 28 days was safe and well-tolerated in study participants. Treatment with the drug also significantly reduced plasma levels of very long-chain fatty acids and other lipids compared to placebo.Management has also been discussing with the FDA to advance its obesity and NASH programs to late-stage development. It plans to meet with the agency before the end of this year to discuss and determine its next steps for the development of both programs. Investors would likely seek an update from management on these discussions.Viking is one of the few biotech stocks with immense potential in the obesity space. VK2735 has shown blockbuster potential, demonstrating superior weight reduction capabilities in clinical studies. In February 2024, management reported that the phase II VENTURE study, which evaluated the subcutaneous (SC) formulation of VK2735, achieved its primary and all secondary endpoints with statistical significance.Patients treated with the once-weekly SC formulation achieved a mean weight reduction of 14.7% after 13 weeks compared with 1.7% in the placebo group. In March 2024, Viking reported data from the early-stage study on the drug's oral formulation, which demonstrated promising dose-dependent reductions in mean body weight after 28 days of daily dosing.Earlier this year, Viking completed the phase IIb VOYAGE study on VK2809 in patients with biopsy-confirmed NASH. The study achieved its secondary endpoints of histologic changes assessed by hepatic biopsy after 52 weeks of treatment with VK2809 when compared with placebo. Overall, 40-50% of patients who received VK2809 achieved NASH resolution (meaning the disease symptoms disappeared) and at least a one-stage improvement in fibrosis compared to 20% in the placebo group. The study had previously achieved its primary endpoint — patients who received VK2809 achieved a statistically significant reduction in liver fat content following 12 weeks of treatment.A single quarter’s results are not so important for long-term investors. Let us delve deeper to understand whether it would be a prudent move to buy, sell, or hold the stock at present.VKTX’s Stock Price Performance & ValuationYear to date, the stock has surged 253.6% against the industry’s 1.7% decline. The stock has also outperformed the sector and the S&P 500. Shares of the company are also currently trading above its 50-day and 200-day moving averages.VKTX Stock Outperforms Industry, Sector & S&P 500 Image Source: Zacks Investment ResearchViking is trading at a premium to the industry. Going by the price/book ratio, the company’s shares currently trade at 7.92, trailing 12-month book value, higher than 3.97 for the industry. Image Source: Zacks Investment ResearchOur Investment Thesis on VKTX StockViking has immensely boosted shareholder value in the past five years, with the stock skyrocketing nearly 900% during this timeframe despite the lack of a stable revenue stream. Though Viking trades at a premium when compared to the industry, we would recommend investors looking for growth stocks to add this company to their portfolio. Management’s encouraging progress with its pipeline drugs demonstrates robust potential for growth.However, we are concerned about the competitive landscape in Viking’s therapeutic areas. While the NASH space is relatively new, with Madrigal Pharmaceuticals’ MDGL Rezdiffra being the first to receive the FDA’s approval for this indication in March, the obesity space is highly competitive. The present obesity market is a duopoly between two pharma giants — Eli Lilly LLY and Novo Nordisk NVO — which are the only ones with FDA-approved obesity drugs in their portfolio. Several other companies like Amgen, Pfizer and Roche are also developing their obesity drug candidates.ConclusionThough pharma big-wigs are currently dominating the obesity market, it is also one of the most lucrative spaces in the overall healthcare sector. While both Lilly and Novo are the market leaders in this space, the demand for obesity drugs is rising, creating opportunities for new entrants. Per a research conducted by Goldman Sachs, the obesity market in the United States could reach $130 billion by 2030. This is also evident from the fact that both Lilly and Novo are investing heavily to optimize their production capacities and have even started evaluating multiple other novel obesity candidates in their pipeline. Viking intends to grab a share of this pie as well.Despite having its share of problems like a lack of a stable revenue stream and increased competitive pressure in the obesity space, we expect the stock to have growth potential, thanks to the strong cash balance of around $942 million (as of June 2024-end) and robust pipeline development.Those who already own this stock may continue to do so. Multiple catalysts could trigger share price movements, such as pipeline advancements, data from these studies and potential drug approvals.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Novo Nordisk A/S (NVO): Free Stock Analysis Report Eli Lilly and Company (LLY): Free Stock Analysis Report Viking Therapeutics, Inc. (VKTX): Free Stock Analysis Report Madrigal Pharmaceuticals, Inc. (MDGL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks