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On Thursday, H.C. Wainwright initiated coverage on ImmunityBio Inc (NASDAQ:IBRX) with a Buy rating, accompanied by a price target of $8.00. The target represents a significant upside from the current trading price of $3.06, with analyst targets ranging from $4.25 to $30.00. According to InvestingPro data, the stock has shown resilience with a 19.5% gain year-to-date, despite broader market volatility. The firm’s analyst provided a valuation based on a composite of discounted future earnings and net present value (NPV) calculations, considering the typical performance metrics for an early development-stage biopharmaceutical company.
The $8.00 price target is derived from a balanced approach, incorporating a $9.81 per share valuation—a figure that represents a 15x multiple of the forecasted fully taxed and diluted GAAP earnings per share (EPS) for FY34, which is $2.13, discounted at a 14% rate. Additionally, the target includes an NPV of $6.10 per share, with a discount rate of 14.0% and a growth rate of 3.0%.
The analysis acknowledges the inherent risks associated with achieving this price target. One of the primary concerns is the clinical risk, as there is always the possibility of failure in clinical trials, which could affect ImmunityBio’s assets or future drug candidates, potentially preventing them from displaying significant efficacy in ongoing or future studies. InvestingPro analysis shows the company’s financial health score is currently rated as WEAK, with rapid cash burn being a key concern.
Another significant risk involves regulatory and commercial challenges. The inability to secure regulatory approval or experiencing delays in the approval process could adversely affect the company’s share price. Furthermore, ImmunityBio faces strong competition from both commercial entities and development-stage companies that have products or candidates targeting similar clinical indications. Competitors with substantially more resources in research and development (R&D) and commercialization could pose a threat to ImmunityBio’s market position.
Lastly, financial risk is highlighted as a potential obstacle, with the possibility that ImmunityBio may need to seek additional equity financing through a secondary offering to complete the development of its drug candidates. This need for extra funding could influence the company’s financial stability and share valuation. However, InvestingPro data reveals a current ratio of 3.36, indicating sufficient liquid assets to meet short-term obligations. Subscribers to InvestingPro can access 8 additional key financial metrics and insights about the company’s financial health and market position.
In other recent news, ImmunityBio reported fourth-quarter results that surpassed expectations. The company posted an adjusted loss of $0.09 per share, which was better than the anticipated loss of $0.17 per share. Revenue for the quarter reached $7.2 million, a significant increase from zero the previous year, and exceeded the consensus forecast of $6.16 million. This revenue growth was largely driven by sales of its ANKTIVA therapy, which gained FDA approval in April 2024. ImmunityBio’s net product revenue for the fourth quarter showed a 21% increase from the third quarter of 2024. For the full year 2024, the company’s net loss decreased to $413.6 million from $583.2 million in 2023. The company ended the year with $149.8 million in cash and marketable securities. ImmunityBio also noted that sales momentum for ANKTIVA has continued into early 2025, with February unit sales volume increasing by 97% compared to December 2024.
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