Viking Therapeutics is having a banner year, delivering more than 200% returns to shareholders. But a recent dip of more than 10% has analysts questioning whether the stock is really a good investment. What’s going on with Viking, and should you buy the dip or let this one pass you by?

What Is VK 2735?

Nearly everyone has heard of Ozempic, the incredibly popular weight loss drug manufactured by Novo Nordisk. But the market for weight loss medications is so big that a lot of areas are experiencing shortages. This indicates that there’s still plenty of room for competition, and Viking has responded with a similar medication currently known as VK 2735. While the drug is still in clinical trials, some analysts believe it has the potential to achieve sales of $21 billion per year once approved.

Proceed With Caution

Despite having a potential blockbuster on its hands, Viking is currently surprisingly volatile. The recent dip was caused by a head-scratching selloff that followed an update on one of the company’s other clinical trials. That update, which was on a potential hepatitis treatment, actually yielded good news: the drug is ready to move into a later-stage trial. But its commercial value may be limited, as existing medications may already serve the same purpose.

Still, that’s no reason for a selloff. Instead, analysts believe that day traders may be driving Viking’s short-term prospects. As clinical data comes in, the stock is likely to rise and fall based solely on that immediate information, rather than a longer-range view. If you’re a long-term investor who’s willing to ride the wave in hopes of an immense payout on the weight loss drug, this could be a great buy. But it’s definitely not a good choice for the faint of heart or those hoping for a quick return.

Neither Stocks.News nor Lisa Fritscher has positions in any of the stocks mentioned.