The Downgrade

Stifel’s recent decision to downgrade ALX Oncology (NASDAQ:ALXO) to hold has reverberated across the investment landscape. It attributed this move to its perception that the company’s CD47 blocker drug evorpacept is now fully valued for the de-risked HER2+ gastric cancer opportunity.

Optimism Amid Caution

In its assessment, the investment bank acknowledged that a more optimistic stance would be plausible if the perceived market opportunity transcended the $100 million mark. However, it expressed a preference for cautious observation until additional development plans take tangible form.

Anticipating Early-Stage Data

Understandably, Stifel recognized that its downgrade arrived ahead of a series of early-stage data catalysts. The forthcoming testing of CD47’s “optionality” looms large on the horizon as a pivotal moment of reckoning.

Challenges Ahead

Despite the potential promise, Stifel remains guarded. The bank pointed to a lack of compelling evidence substantiating the rosy outlook for positive data or clear development pathways as a combination backbone. It cited challenges in this regard, including the historical discord of CD47 deals inflicting significant value erosion and the plethora of CD47/SIRPa assets already crowding pharma pipelines.

Price Target

Stifel affixed a price target of $14 on the stock, signaling its stance on the company’s valuation in the current market environment.