Cantor Fitzgerald Starts Compass Pathways (CMPS) at Overweight

Cantor Fitzgerald analyst Jonathan Fiore initiates coverage on Compass Pathways (NASDAQ: CMPS) with a Overweight rating and a price target of $71.00.

The analyst comments "In valuing CMPS, we use a DCF analysis, in which we have estimated the free cash flow to COMPASS from COMP360 in treatment resistant depression by applying a 65% free cash flow contribution margin to our probability-adjusted revenue projections, which yields ~$65/share. We assume a 45% probability of success and apply a 25% discount rate, consistent with our view of risk for clinical development in TRD, and cost of capital. We also employ a $100M placeholder (~$2/share) for each of the following: 1) COMP360 ex-US revenues; 2) COMP360 in other indications; and 3) Pathways Discovery Center Platform. For comparison purposes, we present a relative value analysis using a group of comparable current commercial (one product) and late-development-stage Neuro-Innovators. We see this group of companies, and their respective valuations, as “aspirational” for COMPASS as it delivers clinical PoC data for COMP360 and, if compelling, transitions from a first-mover to become a paradigm-setting later-development-stage psychedelics-focused Neuro-Innovator."

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Shares of Compass Pathways closed at $35.77 yesterday.

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