Relay Therapeutics (NASDAQ: RLAY) saw its stock price plummet 8.60% in pre-market trading on Friday, despite reporting better-than-expected second-quarter results. The sharp decline appears to be largely driven by a significant target price cut from a major analyst firm.

The biotechnology company reported a quarterly adjusted loss of $0.41 per share for the quarter ended June 30, beating the mean analyst estimate of a $0.49 loss. Revenue came in at $677,000, substantially surpassing expectations of $60,000. This marks the fourth consecutive quarter that Relay Therapeutics has exceeded analyst projections.

However, the positive earnings surprise was overshadowed by Raymond James's decision to slash its target price for Relay Therapeutics from $29 to $19. This substantial 34% reduction in the expected value of the company likely spooked investors, triggering the sell-off. Despite the cut, the new target price still represents a significant upside from the stock's last closing price of $3.49, indicating that Raymond James maintains a relatively optimistic long-term outlook for the company despite near-term challenges.