Key Points

A researcher initiated coverage of the stock with a buy recommendation. He feels its price could reach $41 per share.

On Thursday, an analyst launched coverage of Edgewise Therapeutics(NASDAQ: EWTX) stock, and the market took notice in a good way. On the back of his bullish view of the company, according to data compiled by S&P Global Market Intelligence, its share price vaulted nearly 14% higher across the week.

An analyst finds his inner bull with the biotech

That professional was Guggenheim's Debjit Chattopadhyay, who initiated his Edgewise Therapeutics coverage with a buy recommendation, and price target of $41 per share. That's well more than double the biotech stock's most recent closing price, just shy of $17.

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According to reports, Chattopadhyay wrote in his inaugural research note on Edgewise that with its attractive enterprise value (EV), combined with quite a promising pipeline, the company's stock has significant upside potential.

That EV currently stands at over $1 billion, the analyst pointed out, and it has not one but two promising development programs. The first is EDG-7500, a treatment targeting obstructive and nonobstructive hypertrophic cardiomyopathy, a heart disorder, and the second is Duchenne muscular dystrophy drug sevasemten. Clinical trial results should come in for both within the next year.

A word of caution

Given all that, Edgewise is in a better position than many other biotechs to succeed. We should always bear in mind with such companies, however, that much depends on their pipelines. If experimental drugs do well in the lab and ultimately win regulatory approval, the developer could be quite the winner on the stock market. However, the opposite is usually true if a pipeline drug flops.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why Edgewise Therapeutics Stock Popped This Week was originally published by The Motley Fool

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