We recently published a list of the 7 Best Performing Long Term Stocks in 2024. In this article, we are going to take a look at where Viking Therapeutics, Inc. (NASDAQ:VKTX) stands against the other best performing long term stocks in 2024.
After the latest 50 basis point rate cut by the Federal Reserve, the market has been performing well. All of the major market indices have been in the green since then and experts are taking it as a good sign.
We discussed the Fed’s rate cut in our article about the best day trading stocks. Here is an excerpt from the article:
“…the Federal Open Market Committee (FOMC) chose to lower its policy interest rate by 50 basis points, a move intended to ease monetary policy. Powell explained that this action reflects growing confidence that labor market strength can be maintained, while inflation continues to decrease toward the Fed’s target. Powell emphasized the Fed’s flexibility in its approach and noted that future rate changes will depend on incoming data and the evolving economic landscape.
When questioned about the likelihood of future rate cuts, Powell said that each decision would be data-driven and made on a meeting-by-meeting basis. The Summary of Economic Projections (SEP) suggests a federal funds rate of 4.4% by the end of the year, with further reductions expected in the years ahead, which points to expectations of lower inflation and slightly higher unemployment.”
Understanding the Current Stock Market Optimism
Lead writer for Markets Live at The Wall Street Journal, Gunjan Banerji also shares the market’s optimistic sentiment as she explained in an interview with CNBC on September 25. Banerji discussed the growing optimism in the stock market despite ongoing bullish sentiment for the past few years. She highlighted how the recent rate cut by the Federal Reserve boosted market confidence, with the VIX (volatility index) dropping to its lowest levels and other indicators like high-yield bonds and options showing continued belief in the rally.
Dominic Chu of CNBC expressed concerns about potential market overconfidence, given the calmness amid geopolitical risks, the upcoming U.S. presidential election, and consumer spending challenges. Banerji acknowledged these risks but emphasized that much of the market’s optimism is tied to the Fed’s actions, with people reassured by the larger-than-expected rate cut.
Finally, Banerji pointed out a broadening of the market rally beyond the tech sector and mentioned the strong performances in sectors like energy and materials, and record highs from companies like Caterpillar and McDonald’s, which indicates a healthier, more diverse market rally.
Our Methodology
For this article, we used stock screeners to identify nearly 60 mid to mega-cap stocks with year-to-date share price returns of over 100%. Next, we narrowed our list to 7 stocks with the highest average analyst price target upside, as of September 24. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds. The stocks are sorted in ascending order of their upside potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Is Viking Therapeutics, Inc. (NASDAQ:VKTX) the Best Performing Long Term Stock in 2024?
Viking Therapeutics, Inc. (NASDAQ:VKTX)
Average Analyst Price Target Upside: 84.08%
Stock Price Performance YTD: 238.79%
Number of Hedge Fund Holders: 50
Viking Therapeutics, Inc. (NASDAQ:VKTX) is a clinical-stage biopharmaceutical company and the top stock on our list of the best performing long term stocks in 2024. Currently, it is advancing two promising drug candidates, VK2809 and VK2735, which could address major health challenges.
VK2809 is being investigated as a treatment for non-alcoholic steatohepatitis (NASH), a liver condition marked by fat accumulation that can result in inflammation and scarring. The disease affects a substantial number of people and can lead to severe liver damage if not addressed. The clinical trials for VK2809 aim to determine its effectiveness in managing NASH, which can possibly position the drug as a potential game-changer in a market that desperately needs effective therapies. On the other hand, VK2735 targets specific receptors in the body to tackle obesity and related metabolic issues.
Viking Therapeutics (NASDAQ:VKTX) has Buy ratings from 14 analysts. As of September 24, the average price target of $114.00 represents an upside of 84.08% from the current levels. Recent analysis from Morgan Stanley on September 12 suggests that VK2735 may have a tolerability edge over Roche’s CT-996 oral weight loss drug, particularly following presentations at the European Association for the Study of Diabetes annual meeting.
The firm is looking forward to updated Phase 1 data for VK2735, which is expected to be released at Obesity Week in early November. The data is expected to highlight enhanced weight loss and a favorable safety profile, which reaffirms the notion that VK2735 could emerge as a leader in the obesity treatment space.
The firm reiterated an Overweight rating and $105 price target on Viking Therapeutics (NASDAQ:VKTX). The positive sentiment is driven by the belief that VK2735 possesses “best-in-class potential.” As the company progresses through its clinical trials and approaches key data releases, it may attract increased attention from investors and stakeholders alike.
In Q2, 50 hedge funds held stakes in Viking Therapeutics (NASDAQ:VKTX), with positions worth $479.083 million. As of the second quarter, Viking Global is the most significant shareholder in the company. The firm has increased its stake in the company by 24% to 1.35 million shares worth $71.8 million.
Fred Alger Management stated the following regarding Viking Therapeutics, Inc. (NASDAQ:VKTX) in its Q2 2024 investor letter:
“Viking Therapeutics, Inc. (NASDAQ:VKTX) is a clinical-stage biopharmaceutical company focused on developing novel therapies for patients suffering from metabolic and endocrine disorders. Their lead drug VK2809, a beta-selective thyroid hormone receptor agonist, is in development for nonalcoholic steatohepatitis and nonalcoholic fatty liver disease. Their VK2735 drug is a GLP-1 dual agonist being developed for patients with obesity. During the quarter, the company’s shares were negatively impacted by several factors: 1) a challenging environment for biotechnology stocks, exacerbated by Fed policy decisions to maintain elevated interest rates, 2) increased competition in the obesity treatment landscape, 3) manufacturability and scalability concerns regarding Viking’s obesity drug and 4) the absence of strategic partnerships from large pharmaceutical companies. Despite the challenging quarter, we continue to believe that the company’s GLP-1 drug has the potential to be a best-in-class obesity drug given its favorable efficacy and safety profile. Further, with approximately one-third of U.S. adults suffering from obesity, we believe the company’s GLP[1]1 drug has the potential to address a large market once approved.”
Overall, VKTX ranks 1st on our list of the best performing long-term stocks in 2024. While we acknowledge the potential of VKTX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VKTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
