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Mizuho cut its rating of Arcutis Biotherapeutics (NASDAQ:ARQT) to neutral and slashed its price target, citing lower than expected prescriptions for the drug roflumilast.
The investment bank said it had been bullish on the stock because it believed the market opportunity for the drug in the treatment of psoriasis and three other potential indications was “underappreciated,” based on feedback from dermatologists.
“However, the enthusiastic feedback so far hasn’t translated into stronger fundamentals and stock performance,” the bank added, dropping its price target to $4 from $57.
Mizuho also said that adoption of the company’s drug Zoryve fell short of its forecasts and that the 2024 consensus sales forecast “likely needs downward revision.”
The bank added that concerns about a potential debt covenant breach will also likely be an overhang on the stock.