Citi is so bullish on a biotech company that it has given its stock a target price that represents about 800% upside. That company is US-listed Biomea Fusion, which is developing covalent therapies to treat cancers and metabolic diseases. These therapies offer “a number of potential advantages over conventional non-covalent drugs, including greater target selectivity, lower drug exposure, and the ability to drive a deeper, more durable response,” the company says. In a note on November 22nd, Citi gave the stock a buy rating and a $90 price target, representing a potential upside of about 818% from Tuesday’s price. However, the bank warned that the stock is high risk given the “typical volatility” of biotech stocks and the uncertainty surrounding clinical trials. Citi noted that Biomea’s initial data from its trial of a type 2 diabetes treatment – called BMF-219 – exceeded the bank’s expectations. Citi projects a 65% chance of success for this trial, with $1.9 billion in risk-adjusted US sales by 2035. Beyond diabetes, Biomea is also testing the treatment for leukemia and other cancers. Biomea shares are about 18% higher year-to-date. Citi isn’t alone in its bullishness about the company. Analysts covering the stock give it a 385% upside average price target and an 88% buy rating, according to FactSet. At FactSet, the highest estimate came from Oppenheimer, which gives it a potential upside of more than 600%. Biotech Outlook The biotech sector faces headwinds from early 2022 as macroeconomic uncertainty, regulatory overhangs and rapidly rising interest rates weigh, BMO Capital Markets noted in a Nov. 16 note. “Despite XBI’s underperformance, we see significant opportunities for investors to take profits over the next 6-12 months,” BMO said, referring to the SPDR S&P Biotech ETF. The investment bank said it expects the outperformance in biotech to be driven by flat or declining interest rates “which disproportionately benefit high-duration biotech” and other high-profile catalysts. “The speed and extent of rate hikes has likely been the most important factor in Biotech’s volatility, and any slowdown in rate hikes or cuts could boost the sector (especially SMID-Biotech),” BMO said, referring to small and medium-sized biotech companies. Growth companies, such as biotech and technology, are more sensitive to any fluctuating borrowing costs. — CNBC’s Michael Bloom contributed to this report.