Analysts Have a $92 Target on Viking Therapeutics. Here's What Has to Go Right to Get There.

Viking Therapeutics (NASDAQ: VKTX) has been one of the hopefuls in a big race. The biotech company aims to launch one of the world's next big weight loss drugs. The market, on track to reach nearly $100 billion by the end of the decade, today is dominated by pharma giants Eli Lilly and Novo Nordisk, but high demand for these products means there is room for other players to succeed here too.

Viking is investigating its candidate in a phase 3 trial in injectable format and is preparing to launch a phase 3 trial for its oral formulation. Earlier trial results have been positive, making Viking a potential rival for the pharma giants a few years from now. Analysts are optimistic and have even set a $92 price target for the shares, which today trade for about $33. Here's what has to go right to get there.

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The GLP-1 drug market

Let's start by taking a quick look at the weight loss drug market, a space where GLP-1 drugs have become the star. This class of drugs acts on hormonal pathways involved in the digestion process and, as a result, helps manage blood sugar levels and appetite. Novo Nordisk sells semaglutide under the names Ozempic for type 2 diabetes and Wegovy for weight loss. Lilly sells tirzepatide as Mounjaro and Zepbound for those indications, respectively. Those are injectable products, but the pharma giants also recently launched oral GLP-1 drugs, a move that could further increase the patient population.

As mentioned above, demand for GLP-1 drugs is high enough to support additional participants in the space. The Lilly and Novo drugs were on the U.S. Food and Drug Administration's drug shortage list a couple of years ago as demand surpassed supply -- both companies have since ramped up their manufacturing capabilities to solve the problem. But this illustrates the demand for GLP-1 products, which patients like for their efficacy, safety, and ease of use.

Now, let's consider Viking. The stock price has proven itself to be very reactive to news from its weight loss drug program. In early 2024, when it announced positive phase 2 results, the stock soared 121% in a single trading session. Since that time, it's gradually come down from the level reached then.

News that could boost the stock

But we can imagine another piece of positive news -- particularly at this point in the candidate's development story -- triggering more gains for the stock. The injectable VK2735 is involved in two phase 3 trials, one for obesity and one for patients with obesity and type 2 diabetes. Enrollment in these 78-week trials was completed late last year and in the first quarter of this year. So, certain participants may finish up their 78-week period as early as spring of 2027.

Investors should be on the lookout for any guidance from Viking regarding the release of initial phase 3 trial data. A positive readout could clearly lift the stock price to analysts' $92 target.

In the meantime, any other bits of positive news -- such as data from a maintenance dosing study, expected to be released in the third quarter -- could help the stock move higher.

Considering all of this, is the stock a buy right now? Viking, like all biotechs that don't yet have a commercialized product, comes with some risk. Failure can happen at any stage of the development process, and it could weigh heavily on stock performance. So investors who are very sensitive to risk might prefer investing in pharma giants or even big biotechs with established revenue streams.

But, if you're a growth investor who can handle some risk and you're looking for what may be the next biotech success story, you might consider picking up a few shares of Viking today.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Eli Lilly and Novo Nordisk. The Motley Fool recommends Viking Therapeutics. The Motley Fool has a disclosure policy.