Global Blood Therapeutics Shares Spiking On Analyst's Positive Outlook

Shares of Global Blood Therapeutics Inc GBT climbed as much as 13.6 percent to $23.24 after Wells Fargo initiated the coverage of stock with an Outperform rating and a valuation range of $75-$81 on expected success for GBT440 in Sickle Cell Disease.

"We view GBT440 a best-in-class hemoglobin modifier and estimate peak sales of $2.7B based on demonstrated benefit on hemoglobin increase and reduced red blood cell (RBC) destruction and expected benefit in reducing vaso-occlusive crisis (VOC)," analyst Jim Birchenough wrote in a note.

With the phase 2 studies showing favorable hemoglobin modification rate, the analyst believes that a clinically relevant benefit has already been described for GBT440 and should translate into reduction in vaso-occlusive crisis (VOC).

The analyst also believes that shares could see upside from multiple potential value drivers, especially higher dose (900mg) data for GBT440 at the American Society of Hematology (ASH) meeting in December.

The analyst highlighted data for additional SCD genotypes and adolescents at the ASH meeting in December, and broader development in the area of hypoxemic pulmonary disorders. These include idiopathic pulmonary fibrosis (IPF) data in the second half of 2017, and initiation of at least one more study in the area of hypoxemic pulmonary disorders by the end of this year.

Birchenough expects EPS for 2016 and 2017 of ($2.42) and ($3.09), respectively.

The stock closed at $23.05, up 12.6 percent on volume of 1.14 million shares versus its three-month average volume of 386,000 shares.