Guggenheim raises argenx stock target to $1,100 on growth outlook

On Monday, Guggenheim analysts raised the price target for argenx SE (NASDAQ:ARGX) shares to $1,100 from the previous $775, while maintaining a Buy rating on the stock. Currently trading at $594.21, InvestingPro analysis suggests the stock is undervalued, with additional upside potential. The firm’s analysts cited argenx’s ambitious 2030 goals, which aim to treat 50,000 patients across 10 labeled indications and advance five new molecules to Phase III by 2030. Guggenheim’s analysts believe that argenx is on a trajectory to potentially double its market capitalization within the next five years.

The analysts’ optimism is based on projections that argenx’s Vyvgart and empasiprubart franchises could generate over $17 billion in global peak sales across seven total indications. This outlook appears well-supported by the company’s impressive 77.52% revenue growth and strong financial health score of "GREAT" according to InvestingPro metrics. They anticipate that approximately 38,000 patients could be treated by 2030, with peak figures reaching around 50,000 in the U.S. alone. The analysts noted that current consensus estimates might be understated, as they feel the market has not yet fully accounted for the high probability of success in indications with significant unmet needs, such as Sjögren’s syndrome (SjS) and idiopathic inflammatory myopathies (IIM).

Guggenheim drew parallels between argenx’s path to profitability and the historical trajectories of Vertex Pharmaceuticals (NASDAQ:VRTX) and Regeneron Pharmaceuticals (NASDAQ:REGN), suggesting that argenx could achieve operating margins of 55-60% in a five-year timeframe. The analysts also highlighted the strength of argenx’s pipeline and its research and development spending strategy, which is estimated to be around 30% of revenue for FY25E, as supportive of the company’s growth potential.

The analysis further included a comparison to selected peers with annual sales in the $10-30 billion range, which trade at an average next twelve months (NTM) and 2030 enterprise value/sales (EV/sales) multiple of 5x and 4x, respectively. However, for companies with higher five-year growth potential, the NTM EV/sales multiple is in the 8-9x range. If argenx achieves greater than $10 billion in global peak sales over the next five years, which Guggenheim projects to be more than $12 billion in global sales in FY30 and more than $17 billion in FY35, the firm believes argenx could command a premium multiple, potentially valuing the enterprise in the $70-75 billion range.

The analysts concluded their remarks by emphasizing the managerial efficiency of argenx, which they see as a core strength supporting their confidence in the company’s ability to meet its 2030 agenda. This efficiency is reflected in the company’s robust current ratio of 7.29 and minimal debt levels. They also acknowledged risks to their thesis, including potential competitive pressures, macroeconomic factors, and the failure of pivotal programs in SjS, IIM, chronic inflammatory demyelinating polyneuropathy (CIDP), and multifocal motor neuropathy (MMN). For deeper insights into argenx’s financial health and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which offers detailed analysis of over 1,400 top stocks. Despite these risks, Guggenheim reiterated their Buy rating and increased the price target to $1,100, implying a 6.3x 2030E EV/sales multiple.

In other recent news, argenx SE has reported significant developments that have garnered attention from various analysts. The company announced its fourth-quarter 2024 revenues of $737 million, exceeding estimates from both Truist Securities and consensus projections. This robust performance has led to an increase in price targets from several firms. TD Cowen raised its price target to $761, highlighting the impressive revenue growth of Vyvgart, which saw a 29% quarter-over-quarter increase. Similarly, H.C. Wainwright increased its price target to $720, reflecting confidence in argenx’s strategy and potential revenue growth due to changes in product offerings and market adaptations.

JMP Securities also adjusted its price target to $701, citing the strong performance of the VYVGART franchise and its potential boost from the upcoming approval of a pre-filled syringe version. Truist Securities raised its price target to $700, noting the company’s progress towards profitability and its ambitious plans for multiple studies in 2025. Analysts have noted argenx’s substantial cash reserve of approximately $3.5 billion and projected operating expenses of $2.5 billion for 2025, suggesting a strong financial position.

The company’s ongoing clinical programs and regulatory milestones, including decisions expected in 2025 for various conditions, have been highlighted as key factors in its potential for future growth. These developments reflect a positive outlook on argenx’s financial performance and strategic initiatives, as evidenced by the multiple upgrades and increased price targets from leading analyst firms.

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