Madrigal Pharmaceuticals' (MDGL) metabolic dysfunction-associated steatohepatitis, or MASH, treatment Rezdiffra has "outperformed" BofA Securities' initial cautious expectations, but concerns over "structural issues" persist, the firm's analysts said in a Monday note.

BofA said it sees limited upside potential amid increasing competitive challenges despite Rezdiffra's near-term uptake supporting Madrigal's shares in the near term.

While Madrigal was the first company to receive approval to treat MASH, it still faces commercial hurdles, including payer pushback and upcoming launches from competitors, BofA said.

BofA analysts expect Q3 sales of $255 million. Analysts polled by FactSet expect $247.3 million. BofA projects a Q3 loss of $1.29 per share, compared with a $2.29 loss expected in a FactSet poll.

BofA upgraded the stock's rating to neutral from underperform and raised its price target to $445 from $266.

Price: 404.90, Change: -14.00, Percent Change: -3.34