Viking Therapeutics Stock: Buy or Sell Before Q3 Earnings?

Core Viewpoint - Viking Therapeutics (VKTX) is expected to report a loss of 24 cents per share for the third quarter, with no revenues anticipated due to the absence of marketed drugs in its portfolio [1][4]. Financial Estimates - The Zacks Consensus Estimate for 2024 loss per share has increased from 99 cents to $1.00 over the past 60 days, while estimates for 2025 have narrowed from $1.48 to $1.46 [1]. - The earnings surprise history shows mixed performance, with VKTX beating estimates in two of the last four quarters, missing once, and meeting once, resulting in an average earnings surprise of 5.56% [3]. Pipeline Developments - The focus for the upcoming earnings report will be on updates regarding VKTX's pipeline, which includes three candidates: VK2735 for obesity, VK2809 for non-alcoholic steatohepatitis (NASH), and VK0214 for X-linked adrenoleukodystrophy (X-ALD) [5]. - VKTX reported positive results from a phase Ib study of VK0214, which was safe and well-tolerated, significantly reducing plasma levels of very long-chain fatty acids compared to placebo [5]. - Management is in discussions with the FDA to advance its obesity and NASH programs to late-stage development, with a meeting planned before the end of the year [6]. Clinical Study Results - VK2735 has shown significant weight reduction capabilities, achieving a mean weight reduction of 14.7% after 13 weeks in a phase II study, compared to 1.7% in the placebo group [7]. - VK2809's phase IIb study achieved secondary endpoints, with 40-50% of patients achieving NASH resolution compared to 20% in the placebo group [7]. Stock Performance and Valuation - Year-to-date, VKTX's stock has surged 253.6%, outperforming the industry and the S&P 500, which saw a decline of 1.7% [9]. - The stock is trading at a price/book ratio of 7.92, significantly higher than the industry average of 3.97, indicating a premium valuation [9][10]. Investment Thesis - Despite the lack of a stable revenue stream, VKTX has shown immense shareholder value growth, with a nearly 1000% increase over the past five years [11]. - The competitive landscape in the obesity market is challenging, dominated by Eli Lilly and Novo Nordisk, but the rising demand for obesity drugs presents opportunities for new entrants like VKTX [12]. - VKTX has a strong cash balance of approximately $942 million as of June 2024, supporting its pipeline development and growth potential [12].