Why Madrigal Pharmaceuticals Stock Slumped on Tuesday

Core Viewpoint - Madrigal Pharmaceuticals experienced a significant decline in stock price following a downgrade by an analyst, indicating concerns over its valuation after a strong performance [1][2]. Group 1: Analyst Downgrade - Wolfe Research's Andy Chen downgraded Madrigal's recommendation from outperform to peerperform, setting a price target of $572 per share [2]. - Chen's primary concern is that Madrigal's stock is overvalued relative to its performance, especially after a substantial increase in share price due to the FDA's approval of Rezdiffra [3][4]. Group 2: Revenue Projections - Chen expressed doubt about Madrigal achieving the anticipated $6 billion in annual revenue, suggesting that even if it did, the stock would still not be a good value at current levels [4]. Group 3: Market Sentiment - Despite the success of Rezdiffra, the rapid increase in its stock price has likely been fully accounted for, leading to a recommendation to seek other biotech and pharmaceutical stocks with more attractive valuations [5]. - The Motley Fool Stock Advisor has identified ten stocks that they believe are better investment opportunities than Madrigal Pharmaceuticals [6][8].