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Tuesday, Citi analysts maintained a Buy rating on Incyte Corporation (NASDAQ:INCY) with a steady price target of $88.00. The $12 billion market cap company, currently trading at $62.01, has demonstrated strong financial health according to InvestingPro analysis, with robust revenue growth of ~15% over the last twelve months. The firm’s analysts noted Incyte’s recent announcement of Phase 3 clinical trial results for povorcitinib in treating hidradenitis suppurativa (HS), a chronic skin condition. The trials, named STOP-HS, achieved their primary endpoint, demonstrating placebo-adjusted increases in HS Clinical Response scale (HiSCR50) of 10.5% to 13.7% after 12 weeks. With a strong balance sheet showing more cash than debt and healthy cash flows, Incyte appears well-positioned to continue its drug development programs.
While the efficacy signal was positive, the response rate for povorcitinib was lower than the Phase 2 results, which had shown a stronger HiSCR50 response of approximately 28%. The topline efficacy was also considered modestly inferior to existing biologics like Humira and Cosentyx.
Despite these comparisons, Citi analysts expressed confidence in the drug’s potential. They suggested that povorcitinib could be approved and may provide an oral alternative to the current standard of care, which primarily involves injectable treatments. The analysts anticipate a "healthy debate" regarding the drug’s competitive position, especially against other oral treatments like Rinvoq from AbbVie (NYSE:ABBV), which is expected to release Phase 3 data in HS next year.
The announcement was viewed positively for Incyte, with Citi analysts encouraging investors to buy on any share price weakness. According to InvestingPro data, the stock’s recent 8.9% decline over the past week has pushed it into oversold territory, potentially presenting an opportunity for investors. The firm’s stance indicates a belief in the long-term value of Incyte’s stock, even as the market assesses the implications of the recent trial results. For deeper insights into Incyte’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Incyte Corporation announced results from its Phase 3 STOP-HS clinical trials for povorcitinib, a treatment for moderate to severe hidradenitis suppurativa (HS). The trials met their primary endpoints, showing significant improvement in symptoms compared to placebo, and the company plans to use these data for regulatory submissions worldwide. Despite these results, William Blair downgraded Incyte’s stock from Outperform to Market Perform, citing concerns over the drug’s limited market reach and reduced sales forecasts. RBC Capital maintained a Sector Perform rating and a $68 price target, noting that the drug showed a statistically significant benefit but with lower-than-expected efficacy. Analysts from RBC highlighted that povorcitinib might serve as a later-line treatment, potentially achieving around 20% market penetration among patients previously treated with biologics.
Incyte’s Chief Medical (TASE:BLWV) Officer emphasized the need for new therapies for HS, and the company aims to present detailed results at upcoming scientific meetings. JMP Securities maintained a Market Perform rating on Incyte, noting the company’s strong financial position with a cash reserve of $2.2 billion. They also highlighted the anticipation of pivotal data for povorcitinib expected in 2025. As Incyte continues its clinical programs, the company’s stock performance remains under observation by investors.
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