U.S. stocks lower as investors rotate out of tech ahead of Jackson Hole
On Friday, Canaccord Genuity analysts downgraded Intra-Cellular Therapies (NASDAQ:ITCI) stock from Buy to Hold, adjusting the price target to $132 from the previous $119. The revision follows the recent announcement that Johnson & Johnson (JNJ) is set to acquire Intra-Cellular Therapies for a total equity value of $14.6 billion, which translates to $132 per share. The transaction is expected to conclude early in the second quarter of 2025, subject to regulatory approval.
Intra-Cellular Therapies has been recognized for its neuropsychiatry products, which are considered challenging to develop. The company has demonstrated strong commercial execution, with revenue growing 46.08% in the last twelve months to $613.73 million. Analysts at Canaccord Genuity have previously emphasized the scarcity value of companies like Intra-Cellular, suggesting that the acquisition by JNJ was anticipated. The deal is seen as a strategic fit within JNJ’s neuro franchise, which is currently spearheaded by its Spravato treatment for resistant depression. InvestingPro analysis reveals 12 additional key insights about the company’s financial health and market position, available to subscribers.
Additionally, a recent settlement regarding Intra-Cellular’s Caplyta (lumateperone) has alleviated some concerns about generic competition. The company maintains a strong financial position with a healthy current ratio of 7.66, indicating robust liquidity to support its operations. Caplyta is currently available for the treatment of bipolar depression and schizophrenia and may receive approval for use as an adjunctive treatment for major depressive disorder (MDD) later in the year.
The acquisition is poised to enhance JNJ’s portfolio in the neuropsychiatry space, with Caplyta complementing its existing neuro franchise. Intra-Cellular’s expertise and product pipeline are expected to provide JNJ with valuable assets in this specialized therapeutic area.
Intra-Cellular Therapies’ stock adjustment by Canaccord Genuity reflects the recent developments and the anticipated closing of the acquisition deal with Johnson & Johnson. The raised price target aligns with the acquisition price, while the downgrade to Hold suggests a new valuation equilibrium post-announcement.
In other recent news, Intra-Cellular Therapies is set to be acquired by Johnson & Johnson for approximately $14.6 billion. RBC Capital Markets and Piper Sandler have downgraded their ratings for the biopharmaceutical company, aligning their targets with the proposed acquisition price of $132. The firm’s robust 46% revenue growth over the last year, largely due to the success of its lead drug, Caplyta, was highlighted.
Following the acquisition news, Morgan Stanley (NYSE:MS) also downgraded Intra-Cellular Therapies’ stock rating to Equalweight. Meanwhile, Mizuho (NYSE:MFG) Securities raised the stock’s price target from $100 to $140, maintaining an Outperform rating, after a favorable patent settlement for Caplyta.
Recent developments have also seen Johnson & Johnson’s ’AAA’ credit rating put under review by S&P Global Ratings due to the acquisition. Despite potential leverage concerns, projections suggest the company will reduce its leverage by the end of 2026.
Intra-Cellular Therapies has been the subject of attention due to potential risks to biotech companies, including itself, following the resignation of Dr. Patrizia Cavazzoni from the U.S. Food and Drug Administration. These are recent developments that investors should take note of.
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