Guggenheim cuts ADC Therapeutics target to $7, keeps Buy rating

On Monday, Guggenheim Securities adjusted its outlook on ADC Therapeutics (NYSE:ADCT) by lowering the price target to $7 from the previous $10, while maintaining a Buy rating on the company’s shares. The stock, which has declined over 52% in the past six months and is currently trading near its 52-week low of $1.39, remains undervalued according to InvestingPro analysis. The modification came after ADC Therapeutics announced its fourth-quarter earnings, which revealed sales of its drug ZYNLONTA at $16.4 million, falling short of the anticipated Street consensus of $19.1 million.

The company’s management acknowledged a quarter-over-quarter decline in sales, which was attributed to a decrease in sales volume. This was partially mitigated by an increase in the selling price. With total revenue of $70.84M in the last twelve months and a concerning gross profit margin of -63.17%, the company faces significant challenges. Despite the lower sales, the management remains confident in ZYNLONTA’s market competitiveness, profitability, and a stable sales forecast for the year 2025. InvestingPro data reveals 11 additional key insights about ADCT’s financial health and market position.

ADC Therapeutics has confirmed it will release several key data updates throughout 2025. These include an interim update of the LOTIS-7 study, which evaluates Zynlonta in combination with Columvi, in the second quarter of 2025, followed by more comprehensive data in the second half of the year. Additionally, the company anticipates presenting top-line Phase 3 results from the LOTIS-5 trial by the end of 2025, pending the accrual of the required number of progression-free survival (PFS) events.

Further data presentations are expected for Investigator Sponsored Trials (ISTs) in relapsed/refractory follicular lymphoma (r/r FL) and relapsed/refractory marginal zone lymphoma (r/r MZL), which will be shared at a medical conference or through publication.

In light of these developments, Guggenheim has updated its financial model for ADC Therapeutics, taking into account a more conservative timeline for the potential expansion of Zynlonta’s label into second-line diffuse large B-cell lymphoma (DLBCL) treatment, now projected for 2027 instead of the previously assumed 2026. This projection aligns with the company’s reported financial results for the fourth quarter. While the company maintains a strong current ratio of 3.82, indicating solid short-term liquidity, its negative EBITDA of -$129.32M suggests ongoing cash burn concerns. Despite the lowered price target, Guggenheim’s Buy rating indicates continued optimism in the stock’s future performance. For a comprehensive analysis of ADCT’s financial health and growth prospects, including detailed valuation metrics and peer comparison, access the full Pro Research Report available on InvestingPro.

In other recent news, ADC Therapeutics reported its fourth-quarter 2024 earnings, revealing a mixed financial performance. The company posted an earnings per share (EPS) of -$0.25, which exceeded analysts’ expectations of -$0.43. However, revenue for the quarter came in at $16.91 million, missing the projected $18.85 million. RBC Capital Markets maintained its Outperform rating on ADC Therapeutics, emphasizing the critical nature of the upcoming year for the company’s drug, Zynlonta, despite the revenue miss. The firm’s analyst highlighted the potential for significant updates in 2025, which could positively impact Zynlonta’s revenue base.

ADC Therapeutics continues to focus on expanding Zynlonta’s market presence, particularly in the competitive Diffuse Large B-Cell Lymphoma (DLBCL) market. The company ended 2024 with $251 million in cash and cash equivalents, expecting this to support operations into the second half of 2026. Operating expenses were reduced by 13% year-over-year, reflecting the company’s strategic efforts to streamline operations. Analysts from RBC Capital Markets expressed optimism about the future of Zynlonta, citing anticipated updates from ongoing trials as potential catalysts for growth. Investors and industry stakeholders are closely monitoring ADC Therapeutics as it navigates the competitive landscape and strives to enhance its market position.

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