Needham Keeps Buy Rating on Mereo BioPharma Group, Lowers Price Target to $5.00

Needham analyst Gil Blum maintains a "Buy" rating on Mereo BioPharma Group (MREO) but lowers the price target from $7.00 to $5.00. Despite the rating adjustment, the analyst remains confident in the company's potential. The average one-year price target among 7 analysts is $7.44, implying a 153.04% upside from the current price of $2.94.

Needham analyst Gil Blum has revised the price target for Mereo BioPharma Group (MREO) from $7.00 to $5.00, while maintaining a "Buy" rating on the stock. The adjustment comes in the wake of the company's Phase 3 Orbit study, which is set to proceed to a final analysis by the end of the fourth quarter. Despite the ongoing study developments, the analyst remains optimistic about the potential of setrusumab, the company's lead asset, and the drug's prospects in the market [1].

The current price target average among 7 analysts is $7.44, indicating a 153.04% upside potential from the current price of $2.94. The consensus recommendation from 9 brokerage firms is a "Buy" status, reflecting the overall positive outlook on the stock. However, the recent price target adjustment by Needham underscores the cautious optimism surrounding the ongoing study and the company's potential risks [2].

Mereo BioPharma Group (MREO) has faced market misconceptions due to the delayed interim results of its Phase 3 Orbit trial. The Data Monitoring Committee (DMC) confirmed the drug's acceptable safety profile, allowing the trial to continue without issues. The final analysis will hinge on 18 months of patient data, with a high probability of success due to the robust safety data and the massive unmet need in the rare disease market [3].

The company's strong cash position of $62.5 million as of March 2025 provides financial resilience, with management stating that this is sufficient to fund operations through 2027. The company has also slashed costs strategically, focusing resources on its late-stage programs and maintaining its Foreign Private Issuer status. The cash runway is further bolstered by collaboration milestones with partner Ultragenyx, which is advancing pediatric trials and sharing costs [4].

Mereo BioPharma Group (MREO) is a binary bet on setrusumab's success, with a high-reward, low-risk profile ahead of its pivotal readout. The stock offers compelling upside potential, with a positive readout potentially sending it to $10+ per share, while downside risk is capped by the company's cash runway. Investors should accumulate positions now, ahead of the end-2025 data, as the risks are already reflected in the current valuation [5].

References:
[1] https://www.gurufocus.com/news/2969788/mreo-stock-target-lowered-amid-ongoing-study-developments-mreo-stock-news
[2] https://www.ainvest.com/news/mereo-biopharma-misunderstood-play-rare-disease-innovation-pivotal-trial-readout-2507/
[3] https://www.nasdaq.com/articles/new-analyst-forecast-mreo-given-50-price-target
[4] https://www.benzinga.com/trading-ideas/movers/25/07/46350493/crispr-stock-surges-in-recent-weeks-whats-going-on