Markets soared to new highs last week after a decisive U.S. election result, with small-caps among the major winners. However, Fractyl Health (GUTS) stock fell 13% over the course of last week's trading, as investors responded to the company's latest business update.

With the penny stock bouncing back from its lows, here's a closer look.

About GUTS Stock

Valued at $116 million by market cap and based out of Massachusetts, Fractyl Health Inc. (GUTS) is a metabolic therapeutic company focused on developing new treatments for metabolic diseases, such as obesity and type 2 diabetes. Rather than traditional treatments that focus on chronic symptom management, GUTS aims to target the root causes of the diseases to prevent and reverse them.

Fractyl’s leading product candidate, Revita, is an under-development drug focusing on remodeling the duodenal lining to alter abnormal intestinal nutrient sensing and signal mechanisms, targeting the root causes of metabolic diseases. Revita has received the CE mark in Europe and reimbursement authorization in Germany. Rejuva is another under-development gene therapy platform from GUTS, which is a next-generation adeno-association virus (AAV) for the treatment of obesity and T2D.

GUTS stock is a component of the Russell 2000 Index (RUT) - a small-cap benchmark that gained about 8.7% last week, and is now up nearly 19% YTD. By contrast, GUTS is down 58% over the past six months, including last week's losses.

Fractyl Falls on ObesityWeek

Fractyl presented data during ObesityWeek on Nov. 4, and traders took the opportunity to sell the news, with heavy losses for GUTS on Monday and Tuesday last week. Specifically, the company reported positive updates on its Duodenal Mucosal Resurfacing (DMR) used in the treatment of obesity and type 2 diabetes, with the majority of patients showing clinically significant weight loss.

“The early body weight loss after a single Revita procedure, with a durable weight loss plateau reached after week four, represents a differentiated therapeutic time-action profile compared to current obesity drugs, which require prolonged dose titration and ongoing persistence to achieve weight loss,” said Fractyl in a statement.

The company says the treatment can help in “providing an off-ramp from GLP-1 therapies” in terms of weight maintenance, with data expected from a key trial of tirzepatide weight-loss patients in the fourth quarter of this year.

GUTS Reports Q3 Earnings

Fractyl Health reported Q3 earnings last night, and the stock is bouncing today. The company reported a wider net loss of $23.2 million, compared to last year's $15.7 million, as research & development expenses ramped up to $19.0 million from $9.4 million last year, thanks to ramped-up progress on the REMAIN-1 and REVITALIZE-1 clinical studies.

GUTS closed the quarter with a cash and cash equivalents balance of roughly $84.7 million, which it expects will be sufficient to fund operations through expected key milestones into the fourth quarter of 2025.

What's the Analyst Forecast for Fractyl Stock?

Coverage is light on GUTS stock, with only three analysts actively following the shares. However, the unanimous rating is a “Strong Buy,” with the average price target of $15.50 suggesting that Wall Street expects this penny stock to be a multi-bagger.