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Investing.com - Goldman Sachs has resumed coverage of Roivant Sciences (NASDAQ:ROIV) with a Buy rating and a price target of $19.00, according to a research note released Thursday. The target represents a significant upside from the current trading price of $11.22, with InvestingPro data showing analyst targets ranging from $12 to $22.
The investment bank’s valuation is derived from a discounted cash flow (DCF) model that assumes a 12% weighted average cost of capital (WACC) and a 2% terminal growth rate (TGR). Goldman Sachs indicates this approach reflects the risk associated with Roivant’s business model, which derives most of its value from clinical assets. According to InvestingPro data, the company maintains strong financial health with more cash than debt on its balance sheet and a high shareholder yield.
The firm acknowledges several downside risks to its thesis, including potential worse-than-expected clinical outcomes for Roivant’s lead drug candidates and stronger competition in key therapeutic areas such as the FcRn space and JAK inhibitor market for autoimmune diseases.
Additional risks highlighted in the research note include liquidity concerns due to Roivant’s high cash burn rate, despite its current strong cash position, and the possibility of lower-than-anticipated uptake for key therapeutic assets. InvestingPro analysis reveals the company maintains a healthy current ratio of 33.47, with liquid assets well exceeding short-term obligations. Get access to 10+ additional exclusive ProTips and comprehensive financial metrics with InvestingPro.
Roivant Sciences is a biopharmaceutical company focused on developing and commercializing innovative medicines through its subsidiary "vants" that target specific therapeutic areas.
In other recent news, Roivant Sciences has authorized a new share repurchase program worth up to $500 million, following the completion of a previous $1.5 billion program. This move allows the company to buy back its common shares using available cash, with no set expiration date for the program. Analysts have also weighed in on Roivant Sciences, with Cantor Fitzgerald maintaining an overweight rating and H.C. Wainwright reiterating a buy rating, emphasizing the potential of Roivant’s drug brepocitinib in treating dermatomyositis. Guggenheim also maintained its buy rating, noting the ongoing Phase III VALOR study and the potential for brepocitinib to generate significant sales if approved.
Additionally, Pulmovant, a Roivant subsidiary, reported positive Phase 1 data for mosliciguat, an inhaled treatment for pulmonary hypertension. The data showed that the drug was well-tolerated, supporting its potential as a first-in-class treatment for this condition. The company is currently conducting a Phase 2 trial to further evaluate mosliciguat’s efficacy. These developments come as Roivant continues to advance its pipeline of treatments for various medical conditions.
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