Shares of Novocure Limited (NASDAQ: NVCR) are jumping 12.9% higher as of 11:09 a.m. ET on Thursday. The solid gain came after investment firm Truist Financial upgraded the stock from a hold to a buy recommendation. Truist kept its 12-month price target for the stock at $125, which represents upside potential of more than 70%.
Should investors buy Novocure because one analyst is more upbeat about its prospects? No. However, there are some compelling reasons Truist upgraded the healthcare stock to a buy recommendation.
Novocure's Tumor Treating Fields therapy generates electric fields that can disrupt cancer cell division. The company has achieved success so far primarily in treating glioblastoma, an aggressive type of brain cancer. Its therapy is also used in treating malignant pleural mesothelioma.
Don't look for tremendous revenue growth from Novocure this year. The company expects to increase its active patient base by only 2% to 5% in 2022. However, Novocure has important updates on the way. If those are positive, its market opportunities should expand significantly.
Novocure plans to report final data from its phase 3 clinical study evaluating its Tumor Treating Fields in non-small cell lung cancer this year. It also expects to announce results from a phase 2 study targeting gastric cancer in 2022.
The company also hopes to begin a limited market release later this year in the European Union for its next-generation assay. This assay is designed to boost Tumor Treating Fields' dose delivery and limit heat generation, which could increase clinical efficacy.
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