Analyst Sees 85% Upside for This Pharma Stock

Cantor Fitzgerald said the firm is a leader in an "underappreciated field"

The shares of biopharmaceutical concern Arvinas Inc (NASDAQ:ARVN) took a spill -- along with most of the stock market -- yesterday, as traders panned the company's quarterly earnings report. However, analysts at Cantor Fitzgerald aren't worried, initiating coverage of ARVN stock with an "overweight" rating and $42 price target -- nearly double yesterday's close of $22.75.

The analysts said Arvinas "is a leader in [the] underappreciated field of targeted protein degradation," and upcoming clinical data releases could be a boon for the shares. More specifically, Cantor waxed optimistic on the company's PROTAC platform, which "could emerge as a game-changing new modality," as well as its ARV-110 treatment, which could have "blockbuster potential in prostate cancer."

Since touching a record low of $10.19 on Dec. 21, ARVN stock has more than doubled, embarking on a series of higher highs and lows. The equity ultimately peaked at $28.25 on July 26, before pulling back to test its 80-day moving average. At last check, the shares were up 3.9% to trade at $23.64 -- a roughly 50% premium to ARVN's September initial public offering (IPO) price of $16.

Should the security extend its quest for higher highs, a short squeeze could certainly add fuel to the fire. Short interest shot 21% higher during the past two reporting periods, and now accounts for more than 6% of ARVN's total available float. At the equity's average pace of trading, it would take shorts nearly a week to buy back their bearish bets.

In addition, there's room on the bullish bandwagon for more analysts. The current consensus 12-month price target on Arvinas shares is just $25.25 -- representing a slim 5.9% premium to the stock's current perch. Should the pharma stock resume its recent journey to all-time highs, a batch of price-target hikes could lure more buyers to the table.