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On Tuesday, RBC Capital Markets adjusted its outlook on Neurocrine Biosciences stock, with analyst Brian Abrahams reducing the price target to $139 from the previous $148. The firm maintained a Sector Perform rating on the NASDAQ-listed company (NASDAQ:NBIX), which is currently trading at $105.36, near its 52-week low. According to InvestingPro data, eight analysts have recently revised their earnings estimates downward for the upcoming period, suggesting broader concerns in the analyst community. The adjustment follows an analysis of payer coverage changes, which revealed an increasing stringency in the utilization of Ingrezza, a key product for Neurocrine Biosciences. This trend could be a contributing factor to the company’s weaker-than-expected performance in the fourth quarter of 2024 and the disappointing 2025 guidance.
Abrahams pointed out that the growing restrictions on Ingrezza might continue to impact the drug’s use and pricing, potentially affecting both immediate and long-term demand, as well as new patient starts. He anticipates this situation could lead to a more pronounced effect from future discounting of Austedo under the Inflation Reduction Act. Consequently, RBC Capital now estimates Neurocrine Biosciences’ revenue to hit $2.585 billion in 2025, peaking at $3.08 billion in 2028. Despite these challenges, InvestingPro analysis shows the company maintains excellent financial health with a strong overall score of 3.56, operating with moderate debt levels and liquid assets exceeding short-term obligations.
The analysis also suggests that the consensus model might not fully account for fewer selling weeks in the first quarter of 2025, leading to a potential near-term miss. RBC Capital’s new estimate stands at $538 million for the quarter, compared to the consensus estimate of $585 million. Despite these concerns, Abrahams noted that the drug’s price has not been the primary driver of Ingrezza’s growth. He also mentioned that an expanded salesforce could positively impact sales this year, and that Neurocrine Biosciences may be setting conservative expectations, which could lead to improved sentiment once the market expectations are adjusted.
While the near-term outlook appears pressured, the analyst expressed that a turnaround in stock performance could hinge on the success of the company’s pipeline and Crenessity, a product in development. The success of these elements is deemed necessary to trigger a significant positive shift in investor sentiment towards Neurocrine Biosciences. According to InvestingPro Fair Value analysis, the stock appears undervalued at current levels, trading at a P/E ratio of 32.7 despite maintaining a robust revenue growth forecast of 14% for FY2025. Discover more detailed insights and 10+ additional ProTips about NBIX in the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Neurocrine Biosciences announced the initiation of a Phase 1 clinical trial for its new drug, NBI-1140675, which aims to treat neurological and neuropsychiatric conditions. This development follows the company’s previous success with the FDA-approved valbenazine for tardive dyskinesia and Huntington’s disease chorea. Additionally, Neurocrine Biosciences has set a $500 million share buyback plan, following the completion of a $300 million accelerated repurchase program. Deutsche Bank (ETR:DBKGn) initiated coverage on Neurocrine Biosciences with a Hold rating and a $138 price target, noting that the stock appears fairly valued. UBS adjusted its price target for the company to $154 from $176, maintaining a Buy rating despite recent lower-than-expected guidance for Ingrezza, Neurocrine’s lead product. Guggenheim also maintained a Buy rating but lowered the price target to $163 after fourth-quarter sales of Ingrezza came in slightly below expectations. Despite these challenges, Neurocrine Biosciences continues to advance its clinical pipeline, with plans for pivotal trials in major depressive disorder and schizophrenia. The company is also anticipating several key catalysts in 2025, including Phase II and III readouts for various treatments.
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