Key Points

• Disappointing tolerability results accompanied impressive body weight loss data.

• It's a setback, but Viking Therapeutics still has strategic options.

• The trial may have contained a tough sample group.

• 10 stocks we like better than Viking Therapeutics ›

Shares in Viking Therapeutics (NASDAQ: VKTX) crashed by 35.9% in the week to Friday morning. The decline comes in a week when the company released its top-line results from its phase 2 trial of its lead drug VK2735 (oral dosing) for weight loss. A successful oral formulation could be of substantive value due to the convenience and ease of use of an oral formulation compared to a subcutaneous (injected) formulation.

What went wrong

Unfortunately, the phase 2 results were mixed. On the one hand, the body weight reductions were comparable to Eli Lilly's phase 3 trial for orforglipron (oral), with VK2735 achieving a decrease of mean body weight of 12.2% at the highest dosage compared to a 12.4% reduction at the highest dosage for orforglipron.

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However, there were tolerability issues, with 20% of patients on VK2735 dropping out due to adverse effects. This compares unfavorably to a discontinuation rate of 10.3% at the highest dosage for orforglipron. It is also at odds with the phase 1 results for VK2735 (oral), whereby "no clinically meaningful differences" were reported for adverse effects between treated patients and the placebo group.

What it means to investors

Clinical trials can yield unusual results. Purely by way of illustration, readers should note that treatment discontinuation rates due to adverse effects in the placebo group were 2.6% in the Eli Lilly phase 3, compared to 13% in the placebo group in the Viking phase 2 trial. Whether this implies something about the patient sampling in the trials is open to question.

Although the results are disappointing, Viking can work on optimizing the dose and consider taking VK2735 (oral) through phase 3. Alternatively, outside of an outright bid for the company, it can partner with a larger pharmaceutical company to achieve this goal.

Should you invest $1,000 in Viking Therapeutics right now?

Before you buy stock in Viking Therapeutics, consider this:

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $650,499!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,072,543!*

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*Stock Advisor returns as of August 18, 2025

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends Viking Therapeutics. The Motley Fool has a disclosure policy.

Key Points

• Positive news from a rival sparked a sympathy rally.

• This was aided by a positive research note published by an analyst.

• 10 stocks we like better than Viking Therapeutics ›

Good news from a peer and a positive analyst update were the elements driving Viking Therapeutics (NASDAQ: VKTX) stock higher on the first trading day of the week.

The clinical-stage biotech, closely watched by some because of its investigational weight-loss drug VK2735, saw its share price improve by more than 5% as a result. By contrast, the S&P 500 index basically traded flat across the trading session.

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What's good for the goose...

The news driving Viking and other obesity drug developers came from a leading company in that space, Wegovy maker Novo Nordisk.

Late Friday, the Denmark-based pharmaceutical announced that Wegovy earned approval from the U.S. Food and Drug Administration (FDA) to treat a new indication, noncirrhotic metabolic dysfunction-associated steatohepatitis (MASH), a liver disorder.

Companies like Viking and Novo Nordisk have been on the radar of many of an investor because of the obvious side benefits to obesity drugs. The latter company earning a fresh approval to treat a medical issue besides obesity provides a significant morale boost to shareholders of weight loss drug developers.

Bullish stance reiterated

Also improving sentiment on Viking stock was that new analyst note. Monday morning before market open, Piper Sandler's Biren Amin reiterated his overweight (buy, in other words) recommendation and $71-per-share price target on the biotech.

Amin's focus, according to reports, wasn't Novo Nordisk's recent news; rather, he was cheered by the prospects for VK2735. Viking is putting an oral version of the medication through clinical trials, and the readout of a phase 3 study is expected within this calendar quarter. In his estimation, if oral VK2735 continues to do well in testing and is brought to market, it could garner sales of $2.1 billion.

Should you invest $1,000 in Viking Therapeutics right now?

Before you buy stock in Viking Therapeutics, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Viking Therapeutics wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $668,155!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,106,071!*

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*Stock Advisor returns as of August 18, 2025

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

Key Points

• Viking Therapeutics has key weight loss drugs in phase 2 and phase 3 trials.

• The race is on to bring an oral formulation weight loss medication to market, and Novo Nordisk appears to be the leader.

• Eli Lilly is also developing a promising drug and plans to seek FDA approval in 2025.

• 10 stocks we like better than Viking Therapeutics ›

Investing successfully in biopharmaceutical companies can sometimes require complicated calculations worthy of Albert Einstein's brain. That's because picking the right ones involves a variation of the theory of relativity. And that's tied to the notion that the battle for sales is won not only in the marketing field, but also in who has the most promising clinical trial data. Differing forces can have a relative impact on which company succeeds.

As such, investors interested in Viking Therapeutics (NASDAQ: VKTX) need to monitor not only that company's weight loss drug development but also the development pipelines of rivals Novo Nordisk (NYSE: NVO) and Eli Lilly (NYSE: LLY). Effectively, all three things matter when it comes to the investment thesis for Viking. Here's why.

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The investment case for Viking Therapeutics

Starting with Viking, its key clinical program is VK2735, which Viking describes as "a novel dual agonist of the glucagon-like peptide 1 (GLP-1) and glucose-dependent insulinotropic polypeptide (GIP) receptors for the potential treatment of various metabolic disorders."

It's in clinical trials in both subcutaneous (injection under the skin) and oral forms. This is a key point to understand because an oral formulation has significant advantages over subcutaneously delivered medication, not least in terms of patient comfort and convenience.

• VK2735 (subcutaneous) is currently in a phase 3 trial, having produced excellent results in phase 2 last year, with 88% of patients treated with VK2375 achieving more than 10% weight loss compared to just 4% for the placebo group.
• VK2735 (oral) is in a phase 2 trial, with management anticipating reporting data from the trial in the second half of 2025.

Given that the phase 3 (subcutaneous) trial, which started in June, is a 78-week study, it could be 2027 before results are reported. The real needle mover (pun intended) will be the results of the phase 2 oral trial in 2025. It's easy to assume that the oral trial results will be positive based on the phase 2 subcutaneous results. Still, clinical trials don't always follow suit between the same drug and formulation between phase 2 and phase 3, let alone in this scenario.

On a more positive note, it's reasonable to argue that if the oral trial phase 2 is successful, then history suggests a major pharmaceutical company is likely to look closely at acquiring Viking.

Novo Nordisk and oral Wegovy

The weight loss field is, understandably, crowded, given its lucrative nature; the two leading players are Novo Nordisk with Wegovy and Eli Lilly with Zepbound. Both companies are developing oral formulations of weight loss drugs, with Novo Nordisk electing for an oral version of Wegovy. In contrast, Eli Lilly is developing another GLP-1 receptor agonist, Orforglipron.

Focusing on Novo Nordisk, after a successful phase 3 trial, the Food and Drug Administration (FDA) accepted Novo Nordisk's submission of the oral formulation of Wegovy (which demonstrated similar weight loss as subcutaneous Wegovy), and a decision is expected in the fourth quarter of 2025.

Viking investors should be cautious, as the oral formulation of Wegovy could win out over VK2735 if it succeeds and gets approved this year.

Eli Lilly and Orforglipron

Eli Lilly didn't opt for an oral formulation of Zepbound because it's not suited for oral delivery, and instead is developing the small molecule drug Orforglipron. It too has had a successful phase 3 trial, achieving a mean 12.4% weight loss at the highest dosage of 36mg over 72 weeks. Eli Lilly is hoping to submit it to the FDA before the end of the year. Again, something to look out for.

Where next for Viking Therapeutics

By the end of the year, Viking's phase data for VK2735 (oral) should be out, and a decision on Novo Nordisk's oral Wegovy should be made, too, while Eli Lilly should submit Orforglipron to the FDA. These timelines create an opportunity for Viking to get its phase 2 data out first, and then it remains to be seen if the company will be a takeover target or not. Much will depend on how successful Novo Nordisk is with its oral formulation, and in turn, Eli Lilly with its. When it comes to which will be the best investment, it's somewhat relative to which one manages the best results and gets them out first. Either way, it's something to watch for.

Should you invest $1,000 in Viking Therapeutics right now?

Before you buy stock in Viking Therapeutics, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Viking Therapeutics wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

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*Stock Advisor returns as of August 11, 2025

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk and Viking Therapeutics. The Motley Fool has a disclosure policy.

Key Points

• Analyst expectations are far above the prices you'd need to pay now to own a couple of biotechnology stocks.

• Compass Pathways is developing psilocybin as a treatment for depression.

• Viking Therapeutics recently began a pivotal study with a weight-loss drug that could outperform the competition.

• 10 stocks we like better than Compass Pathways Plc ›

Investors seeking stocks that can put up dramatic gains in a short amount of time can find what they're looking for in the biotechnology industry. Investment bank analysts on Wall Street have tagged a pair of pre-revenue businesses with price targets that are miles above their current stock prices.

Compass Pathways (NASDAQ: CMPS) is developing a depression treatment based on a recreational drug that produced some interesting results in a clinical trial. Viking Therapeutics (NASDAQ: VKTX) is developing anti-obesity treatments that could compete toe-to-toe with blockbusters like Wegovy and Zepbound.

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At recent prices, the average targets that analysts set for these drugmakers suggest they can more than double your money over the next 12 months. Before opening your brokerage account and filling it with these stocks, it's important to remember that sell-side analysts will quietly adjust their price targets downward if things don't work out. Replacing the losses you could incur by following a bad prediction isn't nearly as easy. Here's a closer look at some of the risks these companies face so you can see whether their shares deserve a place in your portfolio.

1. Compass Pathways

Shares of Compass Pathways spiked during the COVID-19 pandemic, and at one point, the pre-commercial-stage drugmaker boasted a market cap above $2 billion. The stock collapsed by about 93.3% from its previous peak, but analysts who follow the company expect a comeback. The consensus price target of $15.78 at the moment implies a gain of more than 300% from recent prices.

Compass Pathways is one of several companies developing recreational psychedelics as treatments for millions of underserved folks with depression and related ailments. Its only clinical-stage treatment candidate at the moment is COMP360, a proprietary formulation of synthetic psilocybin.

Psilocybin is the psychoactive ingredient in "magic" mushrooms. Long known to produce a powerful hallucinogenic effect, psilocybin has gained popularity among drug developers due to its effects on serotonin receptors implicated in major depressive disorder.

In June, Compass Pathways reported successful results from the COMP005 trial with treatment-resistant depression (TRD) patients and COMP360. Six weeks after receiving a single administration, TRD patients who received COMP360 scored an improvement on the Montgomery-Asberg Depression Rating Scale (MADRS) that was 3.6 points better than the placebo group.

An MADRS score above 6 indicates mild depression, while anything above 35 is considered severe. Since COMP360 reduced scores by 3.6 points after one administration, investors are more than a little excited to see upcoming results from the COMP006 study, which will compare results from two fixed doses taken three weeks apart.

Compass Pathways is what some investors call a lottery ticket stock. If the MADRS reduction benefits recorded during the multidose COMP006 trial are any stronger than those observed during the single-dose COMP005 study, this stock could soar. COMP360 could generate over $1 billion annually as a new TRD treatment, but the market currently has much lower expectations. At recent prices, Compass Pathways' recent market cap is just $363 million.

A successful result for COMP006 could cause this stock to soar, but depression is hard to measure. Placebo groups in clinical trials measuring depression often respond well to the extra attention. This makes depression study results highly unpredictable. Even investors with a high tolerance for risk should tread lightly with this stock.

2. Viking Therapeutics

Viking Therapeutics is another clinical-stage drugmaker stock that is way off its all-time high. Early last year, its market cap soared past $9 billion. When the market closed on July 17, the stock's price was 66% below the peak it had reached last year.

Wall Street analysts who follow Viking Therapeutics think its best days are still ahead. The consensus price target of $90.26 suggests its price can rocket 181% higher in about a year.

This stock spiked last February after the company announced success with its lead candidate, a dual GLP-1/GIP receptor agonist tentatively named VK2735. Patients with obesity achieved a placebo-adjusted weight loss of 13% after just 13 weeks of treatment. These results suggest it could outperform Zepbound from Eli Lilly in terms of weight loss.

In November 2023, Zepbound earned approval from the Food and Drug Administration (FDA) to treat obesity. In the first quarter this year, it generated an annualized $9.3 billion in sales. Biotech stocks tend to trade at mid- to high-single-digit multiples of trailing-12-month sales. Viking Therapeutics' market cap of just $3.6 billion seems extremely low for a company with a drug candidate in late-stage trials that could go on to generate Zepbound-sized sales.

Viking Therapeutics appears underappreciated, but it's still a risky stock with a long road ahead. In June, the company started a phase 3 study designed to support a new drug application. If the new 4,500-patient trial uncovers any tolerability issues we missed in smaller phase 2 studies, Viking's price could collapse. This is another stock that's appropriate only for investors with a high risk tolerance.

Should you invest $1,000 in Compass Pathways Plc right now?

Before you buy stock in Compass Pathways Plc, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Compass Pathways Plc wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

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*Stock Advisor returns as of July 15, 2025

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool recommends Viking Therapeutics. The Motley Fool has a disclosure policy.

Key Points

• Eli Lilly is a leader in the weight loss drug market, generating blockbuster revenue.

• Viking Therapeutics recently launched a phase 3 trial for its weight loss candidate -- and could have a promising future in the market.

Though you may think "tech stocks" when someone mentions growth, you actually can find growth stocks throughout a wide variety of industries. Even those like pharmaceuticals, often known for the steadiness of their earnings, may, through certain specialty areas, offer you the opportunity for explosive growth. And today, the perfect example is weight loss drugs.

Today's $28 billion weight loss drug market is on track to reach nearly $100 billion by 2030, according to Goldman Sachs Research, offering companies in the space an extremely solid opportunity over the next several years and likely beyond.

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Two names that have been making headlines in this field are Eli Lilly (NYSE: LLY) and Viking Therapeutics (NASDAQ: VKTX). The former is a current leader, already selling two blockbuster drugs prescribed for weight loss, and the latter is an up-and-coming player, with a candidate in late-stage trials. Which is the better growth buy today? Let's find out.

The case for Eli Lilly

Eli Lilly shares weight loss drug market leadership with fellow big pharma player Novo Nordisk. They each commercialize two drugs prescribed to people aiming to lose weight and have brought in billions of dollars in annual revenue. Here, I'll focus on Lilly.

The company's drugs, Mounjaro and Zepbound, are actually the same compound, tirzepatide. But it's sold under the name Mounjaro for type 2 diabetes and under the name Zepbound for weight loss. The drug acts by stimulating hormonal pathways involved in the control of blood sugar levels and appetite. Thanks to the efficacy of tirzepatide, demand has soared, even surpassing supply until Lilly expanded its production capacity.

But Lilly isn't sitting still in the area of weight loss. The company also is developing other drug candidates that may improve upon tirzepatide. The closest to market right now is orforglipron, Lilly's oral candidate for weight loss that recently delivered positive phase 3 trial results. If approved, it would be the only oral weight loss drug of its class that doesn't require strict food and water restrictions. Lilly aims on applying for regulatory review by the end of this year.

All of this could result in more growth for Lilly this year and well into the future.

The case for Viking Therapeutics

Viking Therapeutics is a biotech company specializing in metabolic conditions, and it's made great progress with its obesity drug candidate, VK2735. The potential drug, in subcutaneous form, recently entered a phase 3 trial, and an oral form is involved in a phase 2 trial. These candidates are in the same class as tirzepatide, so work in the same way.

Investors have shown their excitement about Viking's program in the past: When the company reported positive phase 2 data for the subcutaneous VK2735 last year, the stock soared more than 120% in one trading session. The stock hasn't maintained those gains, but the movement shows that investors are interested in the program -- and more good news ahead could boost the stock again.

Now you might wonder why investors are so excited about Viking if there already are other successful weight loss drugs on the market -- and Lilly even is likely to reach commercialization with an oral weight loss drug ahead of Viking. This is because demand is high, and this is set to continue, so there is plenty of room for more than a couple of companies to succeed in the space. Investors also have speculated about the idea of a big pharma company acquiring Viking to get in on this high growth market.

Should you buy the pharma leader or the biotech challenger?

Lilly has the first-to-market advantage, is closer to the finish line with an oral candidate, and already is generating major revenue from its weight loss portfolio. Viking, if successful through clinical trials, could carve out market share and deliver major revenue growth down the road -- or the company could be acquired, offering investors another way to potentially gain.

Each company offers certain advantages. Now let's answer our question. If all goes well for Viking, it could represent the better growth buy as, starting from zero product revenue today, this player could see revenue soar if and when it brings a weight loss drug to market. And we've seen that Viking's stock price is very reactive to news, meaning the stock could skyrocket in such a scenario. But, if you go the Viking route, you should be comfortable with risk as uncertainty remains: The company hasn't yet reached the finish line with a product.

If you're more of a cautious investor, though, don't worry. You may opt for Lilly as, even though it's climbed 140% over the past three years, it still could have plenty of room to run over the long term thanks to this weight loss drug growth story.

Should you invest $1,000 in Eli Lilly right now?

Before you buy stock in Eli Lilly, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Eli Lilly wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

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See the 10 stocks »

*Stock Advisor returns as of June 30, 2025

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

Key Points

• CRISPR Therapeutics could stage a comeback thanks to clinical and commercial progress.

• Viking Therapeutics looks like a good bet on the fast-growing weight management market.

There are many promising corporations that investors can buy on a dip due to recent market volatility or company-specific issues that predate this year. Take, for instance, CRISPR Therapeutics (NASDAQ: CRSP) and Viking Therapeutics (NASDAQ: VKTX), two mid-cap biotech companies that have lagged broader equities over the trailing-12-month period.

Even with these poor performances, however, there are solid reasons to consider investing in these stocks, especially at current levels. Read on to find out more.

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1. CRISPR Therapeutics

CRISPR Therapeutics made a breakthrough when it created Casgevy, the first gene-editing medicine that used the Nobel Prize-winning CRISPR technique to earn approval. The stock performed well from its 2016 initial public offering (IPO) until about 2021 but has been on a downward trajectory ever since for three reasons.

First, clinical progress is one of the most significant drivers of the performance of smaller biotech stocks. Once they start hitting major milestones, investors tend to take some profits.

Second, Casgevy is a gene-editing therapy that's complex to administer. Despite earning approval in late 2023, the therapy hasn't yet contributed much to CRISPR Therapeutics' results.

Third, the company is unprofitable. That's a big no-no in the current precarious market environment.

That said, CRISPR Therapeutics' next breakthrough could help the stock bounce back. The company is developing several promising medicines and expects data readouts for ongoing clinical trials as early as this year.

CRISPR Therapeutics is targeting challenging areas. The biotech is looking to develop medicines for type 1 diabetes, some hard-to-treat cancers, and other areas. Progress on these fronts could send the stock soaring.

Furthermore, Casgevy will ultimately have a significant impact on CRISPR Therapeutics' financial results. The company will share the profits from this medicine with giant drugmaker Vertex Pharmaceuticals, its collaborator in the development of this medicine, but CRISPR Therapeutics' partnership with Vertex was a net positive for the smaller biotech.

For one, CRISPR Therapeutics probably would not have earned approval for the treatment as quickly as it did in some places, including some countries in the Middle East, where the medicine boasts a more substantial commercial opportunity for Casgevy than the U.S. Securing approval and commercialization in the Middle East alone would have been far too expensive for a smaller drugmaker. Second, partly due to its long-standing partnership with Vertex, CRISPR Therapeutics has a substantial amount of liquidity, ending the first quarter with $1.86 billion in cash and equivalents.

Lastly, Casgevy has blockbuster potential. It costs $2.2 million per treatment course in the U.S., while the two partners estimate about 60,000 patients in their target geographies. Between Casgevy's long-term potential and the company's innovative pipeline, CRISPR Therapeutics could eventually recover and deliver exceptional returns to investors who stay the course.

2. Viking Therapeutics

Viking Therapeutics was a relatively unknown biotech until last year, when it produced strong phase 2 results for VK2735, an investigational weight management therapy. Although the stock soared following this data readout, it hasn't performed well since.

Nothing has gone wrong with Viking Therapeutics' leading candidate -- it's just another case of investors taking some profits. However, Viking Therapeutics looks attractive for several reasons.

The market for anti-obesity therapies is rapidly growing. There are scores of investigational therapies in this field, but most haven't delivered the kind of mid-stage data VK2735 has. The biotech company also has an oral formulation of VK2735 that's currently in Phase 2 studies.

Furthermore, Viking Therapeutics has several other candidates in development. The company's VK2809 is a potential treatment for metabolic dysfunction-associated steatohepatitis, which is also entering phase 3 studies after completing mid-stage trials.

Lastly, Viking's VK0214 is being developed for X-linked adrenoleukodystrophy, a rare genetic disorder affecting the nervous system. VK0214 has earned the orphan drug designation from the U.S. Food and Drug Administration, an honor reserved for medicines that have shown promising clinical data for the treatment of an orphan (or rare) disease with unmet needs.

Viking Therapeutics' pipeline is impressive for a biotech company worth just $3 billion. If it achieves clinical and regulatory successes in the coming years, its share price will likely skyrocket.

There is some risk involved here, as is always the case with clinical-stage biotechs. The stock could drop if it encounters setbacks, particularly with its leading candidate, VK2735. It's important to keep that in mind. But investors comfortable with the volatility should strongly consider initiating a small position in Viking Therapeutics.

Should you invest $1,000 in CRISPR Therapeutics right now?

Before you buy stock in CRISPR Therapeutics, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and CRISPR Therapeutics wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $697,627!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $939,655!*

Now, it’s worth noting Stock Advisor’s total average return is 1,045% — a market-crushing outperformance compared to 178% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 30, 2025

Prosper Junior Bakiny has positions in Vertex Pharmaceuticals and Viking Therapeutics. The Motley Fool has positions in and recommends CRISPR Therapeutics and Vertex Pharmaceuticals. The Motley Fool recommends Viking Therapeutics. The Motley Fool has a disclosure policy.

Though indexes have rebounded, the first half of the year has been rocky for investors. The market had to digest a variety of uncertainties, from geopolitical problems to mixed economic data and the U.S. plan to tax imports. All of these factors -- particularly the import tariff announcements -- have weighed on investors' appetite for stocks.

But in recent weeks, trade talk progress has lifted investor optimism, and this, along with strong corporate earnings reports, has helped the S&P 500 return to positive territory for the year. Many great bargains still exist though, making now a fantastic time to invest. Here are my five dirt cheap favorites to buy before the second half, which starts next Tuesday.

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1. Alphabet

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is the cheapest of the "Magnificent Seven" technology stocks that led market gains last year but tumbled this year amid concerns about tariffs and their impact on the economy. Today, the stock trades for 17 times forward earnings estimates, a steal considering the company's earnings track record, strong moat, and prospects across its main businesses.

This tech giant is the owner of something many people use every day: Google Search. It's the world's No. 1 search engine, and its presence in our daily routine and Alphabet's moves to use artificial intelligence (AI) to continually improve results should help it remain on top. This is key because Alphabet generates most of its revenue through advertisements across the Google platform.

Alphabet's Google Cloud also is proving to be a huge part of the revenue picture, generating double-digit quarterly growth in recent times. Again, AI is part of the story as Alphabet makes available a wide range of AI tools for customers. With AI growing in leaps and bounds and Alphabet's price low, now is the perfect time to invest.

2. Viking Therapeutics

Viking Therapeutics (NASDAQ: VKTX) doesn't yet have products on the market so we can't use traditional valuation metrics to assess the stock price. Instead, it's important to look at pipeline progress, the potential market for its products, and Viking's financial health.

This biotech is working on a variety of candidates for metabolic conditions but the one that's captured investors' attention is VK2735 for weight loss. An injectable candidate is set to start phase 3 trials, and the oral formulation has already started phase 2 trials. Earlier trials have produced strong results, and demand for weight loss drugs is booming -- the market is set to approach $100 billion by the end of the decade.

Though pharma giants Eli Lilly and Novo Nordisk already share the market, demand suggests there's room for additional companies to generate significant growth too. Viking is well positioned to be one of them thanks to its candidates and cash position of more than $800 million to support development. That's why it looks like a bargain today.

3. Target

Target's (NYSE: TGT) revenue growth has stumbled in recent years as shoppers favored essentials over discretionary spending, but this retailer is well positioned to excel over the long term for a few reasons.

Target has built up a strong online presence, and that's helping digital sales advance even if overall sales have stagnated. The company also has invested in its stores through remodels and new openings, and revamped stores generally have delivered higher sales. Target also is known for its owned brands, many of which generate billions of dollars in revenue annually, for example, the Cat & Jack children's clothing line. Owned brands are an important asset for Target as the company has more control over the cost structure and therefore is able to generate higher profits on sales.

On top of this, Target is making moves to focus on growth. In the recent quarter, it announced the creation of an "accleration office" to supercharge decision making and the development of its strategy.

Target stock is cheap, trading at 13 times forward earnings estimates, and could easily head higher with any progress in the coming quarters.

4. Pfizer

Pfizer (NYSE: PFE) is another company that's had a growth problem recently. This is as its top-selling products -- its blockbuster coronavirus vaccine and treatment -- saw declining demand and at the same time, some of Pfizer's older blockbusters headed for patent expiration.

But it's important to take a long-term view and imagine where Pfizer may be a few years from now. The company has brought several new products to market over the past couple of years, and it acquired oncology specialist Seagen as part of an effort to grow its presence in oncology. Importantly, Pfizer says its oncology products are generating high gross margin and operating margin.

Meanwhile, Pfizer also has been working to cut costs, a move to strengthen its business and prepare for a new wave of growth led by its newer products. In the recent quarter, Pfizer said it was on track to deliver $4.5 billion in cost savings by the end of this year. And it expects $500 million of research and development cost savings by next year, and will reinvest this to support pipeline growth.

All of this suggests Pfizer's growth could pick up at any moment, making the stock a bargain trading at about 8 times forward earnings estimates.

5. Carnival

Carnival (NYSE: CCL) (NYSE: CUK) suffered in the early days of the pandemic as it was forced to temporarily halt cruises, but over the past couple of years, the company has been recovering and returning to growth.

The world's biggest cruise operator has done this by focusing on efficiency -- for example, replacing fuel-intensive ships with ones that use less -- and the company also has prioritized paying down debt. It's made significant progress on that, as the chart below shows, and tackled variable-rate debt, a move that makes it less vulnerable to shifts in interest rates.

CCL Total Long Term Debt (Annual) data by YCharts

As for revenue and demand for sailings, they've been on the rise and have reached records in recent quarters. And advanced bookings, even at higher price points, have climbed, too. This is thanks to Carnival's strength in the market as well as the general popularity of cruise vacations.

So, right now, trading at 12 times forward earnings estimates, down from nearly 20 times, Carnival looks like a bargain to get in on before the second half as it continues along its new growth path.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Target. The Motley Fool has positions in and recommends Alphabet, Pfizer, and Target. The Motley Fool recommends Carnival Corp., Novo Nordisk, and Viking Therapeutics. The Motley Fool has a disclosure policy.

Shares of Viking Therapeutics (NASDAQ: VKTX), a mid-cap biotech, are down by 34% this year. This poor performance may suggest that recent company-specific developments have rendered the stock less attractive or that it is being affected by broader market issues. The latter is true, at least to some extent, but Viking Therapeutics' thesis has not changed significantly this year. The drugmaker remains attractive compared to most of its similarly sized peers. Here is why.

Why the stock looks promising

Viking Therapeutics is a clinical-stage biotech. That means the company has no product on the market, generates no revenue, and is consistently unprofitable. Investors aren't too keen on buying shares of companies that fit this profile when broader equities are experiencing significant volatility due to potential macroeconomic issues. In fairness, that makes sense. Clinical-stage biotechs carry above-average risk. Their products may never see the light of day outside the clinic, and even when they do, many do not generate substantial revenue.

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However, Viking Therapeutics is a bit different. The company is developing medicines across several areas with high unmet needs. First, there is the drugmaker's work in the weight management space. The anti-obesity drug market has experienced significant growth in recent years. Yet, analysts continue to predict that the best is yet to come. Viking Therapeutics' leading candidate in this area, VK2735, is a dual GLP-1/GIP agonist. The only approved medicine of this kind on the market is Eli Lilly's Zepbound, an undisputed leader.

Being in the same class as Zepbound doesn't guarantee VK2735's success, but it's still worth pointing out that a similar mechanism of action that led to Zepbound's breakthrough and efficacy could also prove successful for Viking Therapeutics' crown jewel. And more importantly, the investigational medicine has produced better results than almost any other mid-stage candidate in weight management, outside of those being developed by Eli Lilly and Novo Nordisk. That's impressive for a mid-cap biotech, considering significantly larger drugmakers with far more resources are trying to dominate this market.

Viking Therapeutics' other mid-stage program, VK2809, performed well in patients with metabolic dysfunction-associated steatohepatitis (MASH), a disease with obesity as one of the main risk factors and whose prevalence is on the rise. However, the U.S. Food and Drug Administration approved just the first MASH medicine last year, although that will likely change soon.

The point, though, is that VK2809 could join a relatively young market in a few years and generate massive sales down the road. These two candidates set Viking Therapeutics apart from other clinical-stage biotech companies. It's also worth noting that Viking Therapeutics recently signed a multiyear manufacturing agreement with privately held CordenPharma for VK2735. Per the terms of the deal, CordenPharma will manufacture more than a billion oral formulations of the medicine annually, as well as over 100 million autoinjectors and another 100 million syringes per year.

Viking Therapeutics will make payments to CordenPharma, totaling $150 million through 2028. This deal highlights that Viking Therapeutics is already planning some post-commercial activity for its leading candidate. That's a great sign for investors.

Read the fine print

Viking Therapeutics is developing other candidates, including another weight management product that is still in preclinical studies. Following a similar blueprint, this product is a dual agonist that mimics the action of not just one but two gut hormones: amylin, which helps regulate blood sugar, and calcitonin, which regulates calcium levels. There is slow progress on that front, but Viking Therapeutics' commitment to innovation is impressive for such a small biotech. Now, Viking Therapeutics' most advanced programs could fail in phase 3 studies. If that happens, especially with VK2735, the stock price is likely to plummet.

That's a significant risk to consider. That's why the stock is probably not suitable for risk-averse investors. However, those who are comfortable with volatility should strongly consider initiating a small position in the stock. If the business goes under, which isn't that rare for smaller biotech companies, your losses will be relatively small so long as the company makes a tiny portion of your overall portfolio. But there is significant upside potential that those who invest in Viking Therapeutics today could enjoy over the long run.

Should you invest $1,000 in Viking Therapeutics right now?

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Prosper Junior Bakiny has positions in Eli Lilly, Novo Nordisk, and Viking Therapeutics. The Motley Fool recommends Novo Nordisk and Viking Therapeutics. The Motley Fool has a disclosure policy.

Investors looking to cash in on the fast-growing market for weight management medicines will naturally turn to the two leaders in this area, Eli Lilly and Novo Nordisk. However, several other companies seem to have somewhat promising prospects in this field. This group includes Amgen (NASDAQ: AMGN) and Viking Therapeutics (NASDAQ: VKTX), two drugmakers that have produced phase 2 clinical trial data for their leading weight management candidates.

Despite these positive clinical developments, Amgen and Viking Therapeutics have performed poorly on the stock market in the past 12 months, though progress in this area might eventually help them bounce back. But which of these two biotechs should investors trying to profit from the rapid spending on anti-obesity medicines put their money in?

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The case for Amgen

Amgen's leading weight loss candidate is called MariTide. In November, the biotech reported that in a phase 2 study, the medicine led to an average weight loss of about 20% in overweight or obese patients after 52 weeks, with no weight loss plateau observed. Importantly, MariTide is administered subcutaneously once a month -- the current weight management leaders are taken once weekly. A less frequent dosing could appeal to many patients.

The market expected greater weight loss in this study. That's why Amgen's shares fell after it released its phase 2 results. However, the company's data still makes it somewhat likely that it will go on to carve out a solid niche in the rapidly growing weight loss area, although it won't dethrone the leaders.

Further, Amgen's prospects go well beyond its work in the anti-obesity market. The company's deep lineup allows it to generate consistent revenue and profits. In the first quarter, Amgen's sales increased by 9% year over year to $8.1 billion, while its adjusted earnings per share came in at $4.90, 24% higher than the year-ago period. Amgen has several growth drivers. Tezspire, an asthma medicine, is performing well, as is Prolia, a treatment for osteoporosis (a bone disease) in postmenopausal women.

Amgen also has a deep pipeline of investigational products besides MariTide that will eventually lead to brand-new medicines. Lastly, it is an excellent dividend stock. It offers a forward yield of 3.5% -- compared to the S&P 500 index's average of 1.3% -- and has increased its payouts by 201.3% in the past 10 years. Amgen could generate strong returns over the long run even if MariTide doesn't pan out.

The case for Viking Therapeutics

Viking Therapeutics is a clinical-stage biotech. The company's VK2735, its weight management candidate, looks promising. Last year, it reported that at the highest dose, the drug led to a placebo-adjusted mean weight loss of 13.1% (or 14.7% from baseline) after a mere 13 weeks. VK2735 is in the same class of drugs as Eli Lilly's Zepbound. It mimics the action of two gut hormones: GLP-1 and GIP. That doesn't guarantee that it will achieve the same kind of success, but so far, the data looks highly encouraging.

Viking Therapeutics has other candidates. The company's VK2809 targets metabolic dysfunction-associated steatohepatitis. It delivered solid phase 2 results last year. Viking Therapeutics is also developing an oral formulation of VK2735 that is currently in mid-stage studies, while VK0214 is an investigational treatment for a rare, nervous system disorder called X-linked adrenoleukodystrophy.

There is no approved treatment for the disease yet. Viking Therapeutics carries above-average risk, as do all biotech companies without a single product on the market. But if VK2735 aces phase 3 results and earns approval -- and Viking's other candidates pan out as well -- the stock could deliver substantial returns.

The verdict

Amgen is a well-established company that generates consistent financial results. It also pays a dividend. It is a far better option for low-risk, income-seeking investors. There is no contest there. However, Viking Therapeutics has far more upside potential. If the smaller biotech can deliver solid pipeline and regulatory progress in the next few years, its shares will likely skyrocket. Note that the company also has significant potential drawbacks. It could be more appealing for investors with a higher tolerance for volatility.

Should you invest $1,000 in Amgen right now?

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Prosper Junior Bakiny has positions in Eli Lilly, Novo Nordisk, and Viking Therapeutics. The Motley Fool has positions in and recommends Amgen. The Motley Fool recommends Novo Nordisk and Viking Therapeutics. The Motley Fool has a disclosure policy.

A major C-suite change at a potential competitor was a key factor behind the rise of Viking Therapeutics (NASDAQ: VKTX) stock on Friday, which closed the trading session 3% higher. That figure was well higher than the 0.7% increase of the benchmark S&P 500 index.

What's new at Novo

That rival is Novo Nordisk, which announced that its current CEO Lars Jørgensen is to vacate his position.

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This is the Denmark-based pharmaceutical company that vaulted to prominence earlier this decade when its Wegovy became the first GLP-1 drug approved for obesity by the U.S. Food and Drug Administration (FDA).

The European company is a potential competitor because, similarly, Viking has gained a degree of fame with its VK2735, an investigational weight-loss treatment. The medicine performed exceedingly well in phase 2 clinical testing, and hopes are high that it will not only win FDA approval ultimately, but will be a hot item in a hot market when commercialized.

A distraction at best

Of course, what happens at Novo Nordisk doesn't directly affect Viking's operations, most crucially its development activities. Still, any change in a company's leadership threatens to affect its business momentum, and the weight-loss drug segment is getting increasingly competitive. Even small stumbles, or poor personnel decisions, could mean loss of market share for the Danish pharmaceutical.

That said, the reaction with Viking stock seems a bit overdone, especially given that Novo Nordisk is quite a storied enterprise that will likely take care in replacing its CEO. Viking investors should be far more concerned with the progress of VK2735 than what's happening outside the company.

Should you invest $1,000 in Viking Therapeutics right now?

Before you buy stock in Viking Therapeutics, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Viking Therapeutics wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $635,275!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,385!*

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

Viking Therapeutics (NASDAQ: VKTX) stock inched 2.3% higher through 10:20 a.m. ET Monday, and for a most curious reason.

Truist Securities analyst Joon Lee just lowered his price target on the unprofitable biotech stock. Now why would investors think this is good news for Viking?

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Truist's backhanded compliment for Viking Therapeutics

The theory goes like this: Lee cut his price target on Viking from $95 to $75 a share, warning the company faces "intensifying competition in the obesity space" (as The Fly reports today). Yet even so, Lee says that 2025 will be a "year of execution" for Viking as it begins phase 3 clinical trials on its new GLP-1 obesity drug, VK2735.

Good results from this trial could make Viking the third major investment play on weight loss, joining Novo Nordisk and Eli Lilly at the top of this market.

That's the competition Lee is talking about: Novo and Lilly. But even if Viking doesn't win the market entirely, even capturing just a sliver of the multibillion-dollar global market for GLP-1 drugs could be "material" to Viking's results.

Is Viking Therapeutics stock a buy?

Lee is correct. In fact, with no revenues, much less profit, to its credit, getting literally any drug to market would be a material success for Viking, much less gaining a toehold in the red-hot market for GLP-1 weight loss drugs.

It won't happen quickly; analysts polled by S&P Global Market Intelligence forecast less than $2 million in revenue for Viking this year. However, they expect that number to grow rapidly, to $38 million by 2027, for example -- and to $729 million by 2029, the first year analysts expect to see Viking earn a profit.

Still, a lot has to go right for Viking between now and then, and things could fall apart in a hurry if the phase 3 trials don't pan out. For now, I have to consider Viking still a speculative stock. If you feel you must buy it, make sure to "buy small" and stay diversified.

Should you invest $1,000 in Viking Therapeutics right now?

Before you buy stock in Viking Therapeutics, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Viking Therapeutics wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Truist Financial. The Motley Fool recommends Novo Nordisk and Viking Therapeutics. The Motley Fool has a disclosure policy.