Small-Cap Highlights: Innodata's Partnership with Muse, Viking's Success, and Pressure from Fed Interest Rates

This week, media reports indicated that Innodata may have been involved in the development of the AI agent Muse, which Meta unveiled on September 8. Viking Therapeutics reported that its obesity drug helped participants in clinical trials not only lose weight but also maintain their weight loss. The prospect of further Fed rate hikes has put the small-cap rally at risk—here’s a guide on how to choose stocks from small companies under these conditions. The highlights of the small-cap sector for the week of September 21–25 are in the Oninvest digest.

Innodata, a company specializing in training artificial intelligence models, may be behind the AI agent “Muse” developed by Meta, the owner of Facebook and Instagram, according to Hunterbrook Media. It reported that Hunterbrook Capital, an activist fund affiliated with it, has taken a long position in Innodata shares. The company’s stock soared nearly 15% on September 22.

Journalists reached their conclusion regarding Innodata’s role in the development of Muse after interviewing former employees of the company, an analysis of its job postings, and public statements by top executives that the company had become a participant in “a large-scale new program from its largest client focused on agent personalization.”

Innodata and Meta have not officially confirmed the publication’s findings. The scope and terms of the partnership are unknown, but Hunterbrook suggests that the continued development of Muse could bring Innodata new orders for data and testing. The Muse app, through which the new AI agent is available, became the most popular app in the App Store after its release on September 8.

All three Wall Street analysts recommend buying Innodata stock. The average price target is $123.7, which is nearly 79% higher than the closing price on September 25.

After a strong first half of the year, growth among small-cap companies has slowed: the Russell 2000’s outperformance of the S&P 500 since the start of the year has narrowed from 11 percentage points in June to two, Bloomberg reported. The prospect of further Fed rate hikes is particularly risky for companies that will soon need to refinance their debt.

According to Vadim Merkulov, director of the analytics department at Freedom Finance Global, interest expenses for Russell 2000 companies account for about 31% of EBITDA, compared with 6.7% for S&P 500 companies. Nearly 40% of Russell 2000 constituents remain unprofitable.

Merkulov advises avoiding heavily indebted companies and unprofitable biotech firms that will need new financing. Among small companies, he recommends looking for profitable, stable businesses and checking how much debt they will need to repay over the next 6–24 months. The analyst does not suggest completely exiting small-cap stocks, but believes that stock selection now requires greater care.

The biopharmaceutical company Viking Therapeutics reported positive results from a small study of its obesity drug. VK2735 targets two receptors that help regulate appetite. After 21 weeks of weekly injections, weight loss in the various groups ranged from 16% to 19%. When switching to less frequent injections—once or twice a month—some patients were able to maintain most of the weight they had lost (90–97%). The company rates the drug’s tolerability as favorable.

Viking's stock rose 36% on September 22. The fact that the drug's effectiveness is maintained with less frequent dosing is good news for Viking following last year's unsuccessful trials.

Wall Street analysts are almost unanimous in their confidence in Viking’s prospects: 18 out of 20 recommendations are to buy the stock, and only two are to hold it. The average price target of $95.7 implies a 170% increase from the closing price on September 25.

Voyager Technologies, a supplier of defense technologies and developer of the Starlab orbital station—one of the contenders to serve as the commercial successor to the ISS— plans to issue convertible bonds. Investors were unhappy about the potential dilution of their stakes, and the stock price fell by more than 16% on September 23.

The transaction will total $350 million. The 0% bonds will mature in October 2032. The initial conversion price—about $40.82 per share—is roughly 30% higher than the closing price on September 24.

Voyager notes that, in conjunction with the bond offering, it entered into "capped call" agreements designed to limit potential dilution of shareholders' stakes upon conversion of the bonds.

At the end of the second quarter of 2026, the company’s revenue grew 15% year-over-year to a record $52.7 million, and its order backlog stood at $335.5 million. Voyager raised its full-year 2026 forecast from $230–255 million to $275–305 million, which is approximately 66–84% higher than in 2025.

Eight Wall Street analysts recommend buying the company's stock, while two recommend selling it. The average price target is $46.7, which is about 50% higher than the closing price on September 25.