Why Summit Therapeutics Stock Was a Winner Today

Now this is a fine way to begin a week on the stock market. Summit Therapeutics (NASDAQ: SMMT) saw its stock price rise notably Monday, on the happy news that an analyst has initiated coverage with an unambiguous buy recommendation.

With that at its back, the commercial-stage biotech's share price zoomed more than 5% higher, comparing most favorably to the bellwether S&P 500's (SNPINDEX: ^GSPC) 0.3% decrease.

A clear buy, says analyst

The initiating party was JMP Securities' Reni Benjamin, who that morning launched his Summit coverage with an outperform (i.e., buy) rating and a $32-per-share price target. That level is a muscular 60% above the stock's most recent closing price, indicating Benjamin's very bullish take on the company.

According to reports, the pundit's optimistic take is based on what he considers Summit's successful pivot to oncology drugs (it initially focused on infectious diseases). He pointed specifically to encouraging phase 3 trial results for ivonescimab, the cancer treatment it licensed in 2023, in the treatment of lung cancer in a study conducted in China.

Although some are skeptical of the accuracy of clinical data coming from that country, Benjamin believes that market has reached sufficient maturity for such results to be accepted by the healthcare community and investors.

Onward with ivonescimab

While it remains to be seen how Summit's oncology turn ultimately shakes out, at this point it is indeed looking like a winning strategy. Lung cancer continues to be a health scourge in many parts of the world, and if the biotech is successful with its current development ambitions with ivonescimab, it can do quite well.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Summit Therapeutics. The Motley Fool has a disclosure policy.