COMPASS Pathways: HC Wainwright Downgrades to Buy, PT to $40 from $45.

COMPASS Pathways: HC Wainwright Downgrades to Buy, PT to $40 from $45.

July 02, 2025 — H.C. Wainwright has revised its price target for Compass Pathways (CMPS) from $45 to $40, while maintaining a Buy rating on the stock. The adjustment follows Compass Pathways' decision to cease further development in the treatment of anorexia nervosa after concluding their Phase 2 trial [2]. This decision led the firm to remove the indication from its model after the second-quarter report.

Compass Pathways PLC, a mental health care company dedicated to accelerating patient access to evidence-based innovation in mental health, has been pioneering the development of a new model of psilocybin therapy. The company focuses on treatment-resistant depression (TRD), a subset of major depressive disorder (MDD), comprising patients who are inadequately served by the current treatment paradigm. The company has developed a proprietary, high-purity polymorphic crystalline formulation of psilocybin, known as COMP360.

The latest developments have had a mixed impact on the company's stock. While the stock has recovered well after hitting a low of $2.25 per share in late June, the market's reaction to the initial data on the COMP005 trial in June 2025 was negative. The company's Phase 3 trial for COMP005 demonstrated a statistically significant reduction in symptom severity but fell short of market expectations, leading to a sell-off. The stock subsequently recovered, closing at $4.34 per share on August 1, 2025, up ~93% from its late-June low point.

Compass Pathways' financial position remains strong, with cash and equivalents of $221.9 million reported in the second quarter of 2025, enough to fund operating expenses and capital expenditure requirements into 2027. The company's cash burn has been significant, with operating activities burning through -$84.3 million in the first half of 2025, but management has guided operating activities to a cash burn of -$120 million to -$145 million for the fiscal year ending 2025, implying a quarterly run-rate of between -$17.8 million and -$30.3 million for the second half of 2025.

H.C. Wainwright's downgrade to a $40 price target reflects the company's decision to cease development in the treatment of anorexia nervosa and the market's reaction to the initial data on the COMP005 trial. Despite these developments, the company's focus on TRD and its strong financial position suggest that it remains a promising player in the mental health sector.

References:
[1] https://seekingalpha.com/article/4808137-compass-pathways-overly-confident-management-or-overly-skeptical-market
[2] https://www.gurufocus.com/news/3031953/compass-pathways-cmps-price-target-reduced-by-hc-wainwright