Rhythm Pharmaceuticals Stock (RYTM) Erases YTD Losses This Week

Rhythm Pharmaceuticals' stock (NASDAQ: RYTM) moved back into green territory on the year, with a 4.33% gain in yesterday's session bringing the YTD return to 0.27%. Considering the fact that the stock started the year firmly in bearish territory, with a ~22% decline into early April, the shift in sentiment has been dramatic.

The company, a biopharmaceutical firm carving a niche in treatments for rare genetic and neuroendocrine diseases of obesity, has added 28% in the three trading sessions this week, and has been greeted with a spate of analyst upgrades to boot.

HC Wainwright raised their price target on RYTM from $70 to $80, whilst Canaccord raised from $81 to $92. BofA upgraded the stock to buy with an accompanying $63 target, as Wells Fargo ($91 from $80), and Morgan Stanley ($77 from $72) make it a sweep for firms with Buy ratings or equivalent to come out.

Year-over-year, RYTM has gained an impressive 46.5%, a testament to the market's enthusiasm for its commercial progress and pipeline potential. The stock’s inherent volatility, underscored by a high beta factor estimated between 1.75 and 2.32, suggests such swings are characteristic, demanding a strong constitution from investors.

The next set of fundamental results, with quarterly earnings expected around May 6, 2025 are unlikely to be the decisive factor, with the latest rally driven by a Phase 3 trial. The continued success and market expansion of its flagship drug, IMCIVREE (setmelanotide), which targets the MC4R pathway will be a watch point. Adding fuel to future prospects are recent positive Phase 3 results for setmelanotide in treating acquired hypothalamic obesity, potentially opening a significant new patient population.

Wall Street consensus projects a loss per share (EPS) for the quarter ending March 2025 hovering between $-0.67 and $-0.69. This follows a slight miss in the previous quarter (Q4 2024), where reported EPS was $-0.72 against estimates of $-0.69. While profitability remains elusive for the commercial-stage company, the forecast shows a clear path toward improvement. Consensus estimates point to a full-year 2025 EPS loss around $-2.52 to $-2.59, narrowing significantly to approximately $-1.22 by fiscal year 2026.

Where Rhythm has impressed is on the top line. The company reported Q4 2024 revenue of $41.83 million, comfortably beating the $38.48 million analyst expectation. While Q1 2025 revenue estimates are slightly softer at around $41.20 million, the longer-term outlook remains bright. Analysts project substantial growth, with fiscal year 2025 revenue potentially reaching $189.28 million, accelerating further to an estimated $308.61 million in fiscal year 2026.