Rani Therapeutics, RxSight: 2 Bullish Health Care Stock Picks From BofA

Rani Therapeutics Holdings, Inc. RANI, an early stage platform technology company that promotes oral dosing with its RaniPill, and RxSight, Inc. RXST, an ophthalmology-focused MedTech company, went public in late July.

Here's what BofA Securities has to say about the newly listed stocks. 

The Healthcare Analysts: BofA Securities analyst Geoff Meacham initiated coverage of Rani with a Buy rating and $23 price target.

Bob Hopkins from BofA initiated coverage of RxSight with a Buy rating and $17 price target.

Rani Could Revolutionize Drug Delivery: Oral administration of injectable drugs has been a long-held holy grail of therapeutic delivery, Meacham said in a note.

Rani follows a differentiated approach from competitors, which have historically used molecular engineering of the reference drug as a strategy, the analyst said.

"If Rani is successful, we think that it could revolutionize the delivery of complex biologics such as peptides and antibodies," he said. 

Rani's initial pipeline therapies — including octreotide, adalimumab, teriparatide and insulin/GLP-1 — could cumulatively provide more than $5 billion in peak sales if approved, Meacham said. 

BofA sees potential for more accelerated development of future applications once the "RaniPill" is thoroughly validated in the clinic.

The firm is basing its bullish stance on early data and the potential for long-term upside from the RaniPill platform.

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How RxSight Can Capture Market Share: RxSight is a singularly focused ophthalmology company that sells an innovative AT-IOL, Hopkins said.

The lens, the analyst said, offers cataract patients more choice and better visual acuity than traditional AT-IOLs. Despite RxSight's technology being more expensive for patients and requiring more time than other AT-IOLs, over time, it could capture 15%-20% of the AT-IOL market, he said. 

The AT-IOL market is currently valued at about $450 million in the U.S. and about $1.4 billion globally, Hopkins said.

From about $5 million in revenue in the second quarter, RxSight's revenues are estimated to increase to $21 million, $40 million, $68 million, $95 million and $128 million, in 2021-2025, respectively, BofA said.

This suggests the company can capture close to 15% of the US AT-IOL market by 2025, it added.

Health Care Stock Price Action:

At last check, Rani shares were advancing 3.65% to $17.76 and RxSight shares were jumping 11.5% to $13.38. 

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