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RBC Capital raised its price target on DRI Healthcare Trust (TSX:DHT.U) to C$19 from C$18 on Monday, while maintaining an Outperform rating on the stock.
The firm’s updated valuation follows data releases at the American Society of Clinical Oncology (ASCO) Annual Meeting earlier this month that highlighted potential increased competition for Orserdu, DRI’s largest royalty asset. RBC Capital continues to maintain its outlook for Orserdu, with peak revenues expected in 2025.
RBC Capital noted that discussions with Menarini management indicate continued optimism about Orserdu’s prospects, with expectations to sustain and potentially grow U.S. sales despite the evolving competitive landscape. The analyst firm, however, believes this growth could be challenging given the competitive environment.
The price target increase results from RBC Capital’s transition to a discounted cash flow (DCF) valuation model and the incorporation of future royalty transactions into its analysis. This methodological change accounts for the C$1 per unit increase in the target price.
DRI Healthcare Trust, which focuses on acquiring healthcare royalty assets, continues to receive a positive outlook from RBC Capital despite the competitive challenges facing its key asset Orserdu.
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