Canaccord cuts Sage Therapeutics price target to $8, holds rating

Wednesday - Canaccord Genuity has adjusted its outlook on Sage Therapeutics (NASDAQ:SAGE) by reducing the stock’s price target to $8.00 from the previous $9.00, while maintaining a Hold rating on the shares. The stock, currently trading at $7.19, has experienced a significant decline of nearly 70% over the past year, though it has shown strong returns in recent months according to InvestingPro data. While the company maintains a strong cash position exceeding its debt, analysts note concerning cash burn rates. The move comes as analysts at Canaccord continue to evaluate the company’s position within the home coverage sector, particularly in relation to HLMN’s potential response to market changes.

The firm’s analyst noted the significant portion of HLMN’s business, 75%, is tied to repair and remodel (R&R) activities, which are commonly undertaken in preparation for home sales or post-purchase improvements. With the upcoming Q4 results set for release on February 18, Canaccord conducted a survey of 100 HLMN customer locations to gauge business trends in the face of consumer pressures, a recent rise in existing home sales, and the Federal Reserve’s pause on interest rate cuts in January.

The surveyed locations spanned across various geographical areas and included 15 Lowe’s (NYSE:LOW), 25 Ace Hardware, 13 Home Depot (NYSE:HD), 27 Tractor Supply (NASDAQ:TSCO), and 20 traditional hardware stores and lumber supply locations. Findings from the survey indicated a slow shift by customers towards larger projects, despite an increase in lumber prices. Initial observations suggested that recently acquired brands Koch and Intex have not yet made a significant impact on shelf space.

However, further analysis revealed that Koch is expected to broaden its presence in the Ace Hardware chain in 2025/2026, while Intex, with 70% of its business in private label, presents more of a challenge to track. Canaccord analysts believe that the integration of these acquisitions is on track with expectations.

In light of these insights, Canaccord has made a slight upward revision to its Q4 estimates for HLMN and reaffirmed its Buy rating and $13 price target for the stock. According to InvestingPro’s Fair Value analysis, SAGE currently appears undervalued, with analyst targets ranging from $5 to $14. The firm’s findings and expectations reflect a cautious yet optimistic view of HLMN’s performance and its strategic acquisitions moving forward.

In other recent news, Sage Therapeutics has been the subject of several significant developments. Mizuho (NYSE:MFG) Securities recently raised their price target for Sage Therapeutics to $9.00, following Biogen (NASDAQ:BIIB)’s proposal to acquire the company. The revision, led by analyst Vamil Divan, assumes that a substantial portion of Sage’s estimated $500 million cash reserves will remain post-acquisition and values Sage’s 50% stake in the potential sales of their drug Zurzuvae at $4 per share.

In parallel, Sage Therapeutics announced the initiation of a strategic review process after rejecting an unsolicited acquisition proposal from Biogen. The company’s Board of Directors is exploring a range of strategic alternatives, including potential transactions, business combinations, or a sale. Goldman Sachs & Co. LLC and Skadden, Arps, Slate, Meagher & Flom LLP are serving as financial and legal advisors, respectively, during this process.

Additionally, Piper Sandler analyst David Amsellem adjusted the price target for Sage Therapeutics, reducing it to $9 from $26, while maintaining an Overweight rating. Amsellem remains optimistic about the company’s prospects, particularly with the performance of its drug Zurzuvae in post-partum depression (PPD (NASDAQ:PPD)).

Meanwhile, Mizuho Securities also reduced Sage Therapeutics’ price target to $6.00 following the cessation of development for Sage’s drug, dalzanemdor, after it failed to meet primary and secondary endpoints in a Phase 2 trial. Lastly, the company announced the upcoming retirement of board member Dr. Jeffrey M. Jonas, effective December 1, 2024.

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