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On Thursday, Raymond (NSE:RYMD) James maintained a Market Perform rating on Galapagos (AS:GLPG) NV (NASDAQ:GLPG) following the company’s announcement of its first-quarter financial results. Galapagos reported a quarterly earnings per share (EPS) loss of €(2.33), which was significantly lower than Raymond James’ estimate of €(0.28). The difference in expected earnings was attributed to several factors, including severance costs, impairment on fixed assets, and the early termination of collaboration agreements. According to InvestingPro data, despite these challenges, the company maintains impressive gross profit margins of 87.35% and has achieved revenue growth of 14.99% over the last twelve months. InvestingPro’s analysis indicates the stock is currently undervalued based on its Fair Value model.
The company disclosed that it ended the first quarter with €3.3 billion in cash and cash equivalents. Approximately €2.5 billion of this reserve is earmarked for SpinCo, a spin-off entity, with an additional €500 million intended for other uses. InvestingPro analysis reveals that while the company holds more cash than debt and maintains strong liquidity with a current ratio of 9.97, it is quickly burning through its cash reserves. Galapagos is currently undergoing a transitional phase with planned leadership changes; both the CFO/COO and CEO are set to leave within the next year. Get access to 8 more exclusive InvestingPro Tips and comprehensive financial analysis with a Pro subscription. Furthermore, Henry Gosebruch was recently appointed as the CEO of SpinCo, and more details regarding the spin-off’s focus and strategy are expected to be revealed as the separation approaches in the third quarter of 2025.
Despite the corporate changes and the advancement of its GLPG5101 therapy, along with the expansion of decentralized manufacturing units (DMUs) in the United States, Raymond James remains cautious. The firm cites skepticism regarding Galapagos’ potential success within the highly competitive non-Hodgkin lymphoma (NHL) cell therapy and bispecific antibody market. The analyst’s commentary suggests that while there are positive developments within the company, the challenges in the sector may impact the likelihood of Galapagos’ success. The Market Perform rating indicates that Raymond James does not foresee the stock outperforming the broader market in the near term.
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