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Beam Therapeutics (NASDAQ: BEAM) stock thundered out of the gate this week, rising to close nearly 17% higher in price on Monday. Much of this was due to a recommendation upgrade from a prominent bank. By contrast, the S&P 500 only eked out a 0.8% gain.

JPMorgan Chase gets more bullish on Beam

Well before market open, JPMorgan Chase's (NYSE: JPM) Eric Joseph moved his recommendation on Beam one peg up to overweight (buy, in other words) from the preceding neutral. He also topped off his price target on the biotech's stock to $40 per share from $38.

Joseph's new take follows several recent updates from the company, as well as a number of interactions with it at the J.P. Morgan Healthcare industry conference held in San Francisco earlier this month.

Based on these, Joseph is convinced that Beam has a better-than-expected opportunity in the treatment of alpha-1 antitrypsin deficiency (AATD), an inherited disorder that can result in liver and lung disease.

The company specializes in the development of precision genetic treatments via a technique called base editing and currently has a drug in development aimed at treating the affliction. The JPMorgan Chase analyst feels that AATD presents a roughly $12 billion market for the taking.

An improved balance sheet matters

Joseph is also encouraged by several top-down factors, including what he describes as Beam's "streamlined" pipeline and a stronger balance sheet following its recent sale of product rights for a trio of peer Verve Therapeutics's cardiovascular gene-editing programs to pharmaceutical giant Eli Lilly. All told, the sale is potentially worth as much as $600 million, factoring in possible milestone payments.

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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Beam Therapeutics and JPMorgan Chase. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.