How might the upcoming data impact analyst coverage and earnings forecasts for MERE?

Impact on analyst coverage & earnings forecasts

The year‑end 2025 read‑out from the Phase 3 Orbit and Cosmic studies of setrusumab is the first major data point that could move Mereo (MERE) from a “clinical‑stage” story to a potentially commercial‑stage story. When a biotech secures a positive Phase 3 read‑out, analysts typically broaden their coverage—adding more research‑focused houses and, in some cases, upgrading the company to a “sell‑side coverage” status. Until now MERE’s coverage has been thin, largely limited to a handful of niche‑sector analysts. A successful data set is likely to trigger:

• New analyst initiations – larger equity research boutiques and mainstream houses (e.g., BMO, Stifel, Jefferies) will add MERE to their coverage lists, increasing the “coverage count” and liquidity.
  
• Higher earnings expectations – a positive efficacy signal would allow MERE to start modelling a 2026‑2027 product launch, moving the earnings forecast from a cash‑burn, pre‑revenue outlook to a modest but growing revenue stream (e.g., $30‑$50 M in 2027, assuming a niche OI indication). Even a neutral or mixed read‑out will still force analysts to update their cash‑runway models, tightening the forward‑looking cash‑burn estimates and potentially compressing the discount to cash‑flow.

Trading implications

• Short‑term catalyst play – The market will price in the data release well before the actual results, creating a “build‑up” phase. Expect a modest rally on any upbeat interim updates, followed by a volatility spike when the full data are released.
  
• Positioning – If you are already long, consider adding on a pull‑back if the stock stalls below the 20‑day moving average (≈ $0.12‑$0.13) with volume below the 30‑day average—this would set a lower entry cost before the catalyst. Conversely, a weak read‑out could trigger a rapid sell‑off, so a tight stop just below the recent low (≈ $0.09) would protect against downside.
  
• Risk‑reward – With the data still 12‑18 months away, the upside is largely contingent on a positive Phase 3 outcome. The current risk‑reward profile is modest (≈ 1.5‑2×), but the potential for analyst upgrades and earnings‑forecast lifts makes the stock a “play‑the‑catalyst” candidate rather than a long‑term hold at today’s valuation.
  

In short, the year‑end 2025 Phase 3 data are likely to expand analyst coverage, prompt the first meaningful earnings forecasts, and generate a clear short‑to‑mid‑term trading opportunity. Position accordingly, but keep a disciplined stop to manage the inherent biotech volatility.