VKTX

Is Viking Therapeutics Stock a Millionaire Maker?

There's no shortage of hype and excitement surrounding Viking Therapeutics (NASDAQ: VKTX) stock these days. The company has a promising weight loss drug candidate in its pipeline at a time when many healthcare businesses are eager to get a piece of that massive market. This year alone, shares of Viking are already up a staggering 240%, and that's even after they've given back some gains from their peak.

Yet its market cap still isn't all that high at less than $7 billion. Given the hope around the business and the possibility for it to get much bigger and more valuable in the future, is this a stock that has the potential to make you a millionaire?

Why Viking Therapeutics could have a lot of upside

Viking doesn't have any approved products or any consistent sources of revenue right now, which makes it a risky investment. But investors have become more bullish about the company of late due to recently revealed trial results for VK2735, a GLP-1 (glucagon-like peptide 1) and GIP receptor agonist that can assist patients with weight loss.

Data from a phase 2 trial showed that patients taking VK2735 lost close to 15% of their body weight, on average, after only 13 weeks of treatment.

To clarify how impressive that is, compare it to the latest clinical trial data readout on a weight loss drug from one of the leaders in the space.

Novo Nordisk is already known for its diabetes medication, Ozempic, and weight loss drug, Wegovy -- both being brands for the GLP-1 agonist semaglutide. But Novo is particularly bullish about the news out of a phase 1 trial of its own new weight loss pill, amycretin. In that trial, participants taking amycretin averaged a 13% weight loss over a 12-week period -- more than twice the rate of weight loss achieved in trials by Wegovy.

Now, the trials Novo Nordisk and Viking conducted weren't identical, but it's easy to see the significance of Viking's recent results. If VK2735 holds up over a long period and it helps people keep the weight off for the long-term while also not causing any serious side effects, it could easily become one of the top weight loss drugs on the market.

Does the stock have millionaire-making potential?

If you're considering investing in Viking Therapeutics stock today, you might think that based on its fairly modest valuation, there could be significant gains to be made. But whether those could be high enough to make you a millionaire is a different question.

For example, if you invested $10,000 into this stock, you would need it to be a 100-bagger for that investment to be worth $1 million at some point in the future. That would drive Viking's market cap from approximately $6.8 billion now to $680 billion. At that valuation, it would be one of the most valuable healthcare companies in the world. Novo Nordisk falls into that category, and its market cap is only around $600 billion.

Of course, if you invested more money, you'd need a relatively less extraordinary return to have this single stock position make you a millionaire. Start with $20,000, for example, and you'd only need the stock to be a 50-bagger. That would still be a massive and unusual result, but 50x growth would bring Viking to a market cap of $340 billion. That's still significant based primarily on the hopes of one weight loss treatment.

Viking's valuation is low, but the gains needed on a modestly sized investment make it improbable that this stock could make you a millionaire. You would likely need to invest a large sum of money (e.g., in excess of $50,000) for that to be a more realistic scenario, and that's a lot to put into a single stock -- particularly one that has this level of risk.

Is Viking Therapeutics stock a buy?

Viking Therapeutics may not have the potential to make you a millionaire, but it can still be an excellent buy-and-hold investment. There is plenty of risk here, so it isn't a suitable pick for all portfolios. But if you're comfortable with risk and volatility, there's a strong case to be made for owning the stock. Based on the encouraging trial results so far for VK2735, Viking could be a great investment over the long run.

Should you invest $1,000 in Viking Therapeutics right now?

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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