Halozyme stock holds $78 target despite Medicare concerns

On Wednesday, JMP Securities reaffirmed their positive outlook on Halozyme Therapeutics (NASDAQ:HALO), maintaining a Market Outperform rating and a $78.00 price target. Halozyme’s stock experienced a significant drop on Tuesday, plunging 25% compared to a 2% decline in the XBI biotech index. InvestingPro data shows the stock has fallen 28.39% in the past week, though it maintains a positive 14.63% return over the past year. This downturn was in response to the Centers for Medicare & Medicaid Services (CMS) releasing draft guidance that could potentially impact drug prices, particularly for combination products using Halozyme’s ENHANZE technology.

The draft guidance is part of an update to the Medicare drug price negotiation process, which some market participants believe could negatively affect drugs that incorporate ENHANZE. JMP Securities analyst Jason Butler addressed these concerns, emphasizing that the clinical benefits of ENHANZE-enhanced drugs are substantial enough to mitigate the impact of the new Medicare pricing framework. Butler suggested that the market’s reaction may have been disproportionate to the actual risk posed to Halozyme’s offerings.

ENHANZE technology is known for its ability to reduce intravenous (IV) infusion-related reactions and potentially improve the efficacy of the drugs it is paired with. Additionally, it offers patients the advantage of not being confined to infusion centers for extended periods. JMP Securities’ stance is that these significant clinical benefits will likely prevent ENHANZE-based drugs from being subjected to earlier IRA price negotiations than previously expected.

Despite the recent market turbulence, JMP Securities stands by its risk-adjusted, discounted cash flow (DCF) derived price target for Halozyme. The firm’s continued support reflects confidence in the intrinsic value of Halozyme’s technology and its importance in the development of combination therapies. According to InvestingPro analysis, the stock appears undervalued at current levels, with strong fundamentals including a perfect Piotroski Score of 9 and impressive 76.17% gross margins. Get detailed insights and 12 more exclusive ProTips with an InvestingPro subscription.

Halozyme Therapeutics specializes in creating novel oncology and drug-delivery therapies. Its proprietary ENHANZE technology is a platform designed to enhance the delivery and absorption of injectable drugs, potentially improving their efficacy and the overall treatment experience for patients. The company’s strong execution is reflected in its 25.65% revenue growth and robust financial health metrics. Access the comprehensive Pro Research Report for Halozyme, along with 1,400+ other top stocks, exclusively on InvestingPro.

In other recent news, Halozyme Therapeutics has reported a strong financial performance for the first quarter of 2025, with revenues reaching $264.9 million, a 35% increase from the previous year, and non-GAAP earnings per share rising to $1.11 from $0.79. These results surpassed estimates from Benchmark, which had projected revenues of $240.0 million and non-GAAP EPS of $0.99. Despite this positive financial outlook, Halozyme faces potential challenges due to draft guidance from the Centers for Medicare & Medicaid Services (CMS) related to the 2028 Inflation Reduction Act (IRA), which could impact pricing protections for its combination products. This has led to a downgrade from Leerink Partners, which changed its rating from Market Perform to Underperform and reduced the price target to $47.00. Similarly, Morgan Stanley (NYSE:MS) downgraded Halozyme from Overweight to Equalweight, citing concerns over the draft guidance affecting industry incentives. Meanwhile, Evercore ISI has maintained its Outperform rating on Halozyme, reflecting confidence amidst the ongoing regulatory discussions. Additionally, Benchmark has kept its Hold rating and $75.00 price target, acknowledging the company’s strong quarterly performance.

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