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Key Takeaways

• Jefferies initiated a "buy" rating on Rocket Pharmaceuticals based on the biotech firm's experimental gene therapies.

• Jefferies also set a price target of $29.

• The analysts said they were especially optimistic about Rocket's treatment for a rare genetic heart condition, which they believe could be a $1 billion opportunity for the company.

Shares of Rocket Pharmaceuticals (RCKT) jumped 5.5% intraday Wednesday as Jefferies initiated coverage of the biotech company with a "buy" rating on optimism about the experimental drugs in its pipeline. Jefferies also set a price target of $29, more than double its current value.

The analysts wrote in a note to clients that Rocket Pharma is testing five or more gene therapy treatments for rare diseases. They were especially focused on RP-A501 (AAV9) for Danon heart disease, a genetic disorder that affects the heart with no current treatment options.

The analysts explained that the medicine "has a high 65-75% chance to succeed in a pivotal Phase II study" next year, and might be a $1 billion opportunity for the firm. In addition, they believe a positive result could boost the stock price 100%, "implying a favorable risk/reward at $1.3B cap."

The analysts argued that a discounted cash flow (DCF)-based sum-of-the-parts (SOTP) valuation justifies their $29 price target.

The report is good news for Rocket Pharmaceuticals investors who haven’t had a lot lately. The shares have steadily declined this year, hitting a more than two-year low last week. Even with today's advance, the stock has lost nearly 60% of its value in 2024.

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