Galapagos stock rating upgraded by Leerink Partners on cost-cutting moves

Investing.com - Leerink Partners upgraded Galapagos NV (NASDAQ:GLPG) from Market Perform to Outperform on Wednesday, raising its price target to $40.00 from $29.00. The stock has shown strong momentum, gaining over 37% in the past six months, though InvestingPro data indicates the company remains unprofitable over the last twelve months.

The upgrade follows Galapagos’ announcement Wednesday morning that it would wind down its cell therapy business after completing a strategic review, a move that Leerink views as evidence of management’s commitment to reducing operating expenses.

Galapagos continues to trade at a deeply negative enterprise value, with a market capitalization of approximately $2.2 billion compared to its last reported cash balance of about €3.1 billion, according to Leerink.

The research firm had previously maintained a negative outlook on Galapagos due to concerns about management’s willingness to control spending and execute business development initiatives effectively.

Leerink’s upgrade reflects its belief that Galapagos is now "less likely to be a NPV negative business" and that its stock will move closer to its cash balance as market perception improves regarding management’s decision-making capabilities.

In other recent news, Galapagos has decided to wind down its cell therapy unit after unsuccessful attempts to find a buyer for the business. The decision was unanimously approved by the company’s board, although the two directors appointed by Gilead recused themselves from the vote. This development follows the inability of several interested parties, including a consortium led by former CEO Paul Stoffels, to provide fully financed offers for the unit.

Additionally, Galapagos reported second-quarter 2025 earnings per share of €(1.60), which significantly missed Raymond James’ estimate of €(0.22). The shortfall was attributed to expenditures related to severance costs, impairment on fixed assets, and early termination of collaboration agreements. In light of these financial results and a corporate update, Raymond James has reiterated its Market Perform rating on Galapagos. These recent developments provide investors with important insights into the company’s current financial and operational status.

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