Scotiabank Rates Avidity Biosciences with 126.84% Upside Potential

Scotiabank believes Avidity Biosciences holds potential, projecting a 126.84% upside from its current price. With a sector outperform recommendation, investors may find it an intriguing option for growth despite projected revenue decline.

Date: 08-03-2025

AI Rating: 5

Buy Rating and Price Forecast

Scotiabank’s initiation of coverage with a Sector Outperform recommendation reflects a positive sentiment towards Avidity Biosciences. The analyst's price forecast suggests a significant upside of 126.84% based on an average target price of $68.71, compared to the current price of $30.29. This projection indicates strong market confidence and could lead to increased investor interest.

Projected Revenue Decline

However, it is crucial to note that the projected annual revenue for Avidity Biosciences is $8 million, showing a decrease of 22.76%. This decline could be a red flag for investors as it suggests challenges in revenue generation that may affect overall company performance and future growth prospects.

EPS Concerns

The anticipated non-GAAP EPS is reported at -3.53, indicating the company will likely experience losses. Negative earnings can affect investor sentiment negatively, particularly if losses are more substantial than expected. This number is critical as it reflects the company's profitability capability and can usually lead to stock price declines if sustained over time.

Institutional Sentiment

Institutional ownership has shown slight growth, with shares owned increasing by 2.09%. However, the average portfolio weight has seen a notable increase of 27.51%, indicating a rising confidence among some institutional investors. Still, the put/call ratio stands at 1.12, suggesting a bearish outlook among options traders, which could exert downward pressure on stock prices in the near term.

Influence of Major Shareholders

Significant adjustments in shareholdings by major institutions—some increasing while others dramatically decrease their allocations—demonstrate mixed sentiments about Avidity’s future. Price T Rowe Associates, for instance, upped their shares while decreasing allocation drastically, hinting at an uncertain long-term outlook for the company.

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