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On Tuesday, RBC Capital Markets adjusted its outlook on Incyte Corporation (NASDAQ:INCY), reducing the price target to $68 from the previous $70, as the stock experiences a notable 7.85% decline over the past week. The firm has chosen to maintain a Sector Perform rating for the biopharmaceutical company, which according to InvestingPro data, maintains a GOOD financial health score with strong cash flow metrics. RBC Capital’s analyst, Brian Abrahams, cited a mix of factors influencing this decision, including expectations for Incyte’s product pipeline in 2025, the looming expiration of exclusivity for its flagship drug Jakafi, and a less than expected guidance for Opzelura, which is considered a key long-term growth driver for the company. Despite these concerns, InvestingPro data shows the company has maintained solid revenue growth of 12.94% over the last twelve months, with analyst price targets ranging from $52 to $100.
Abrahams pointed out that Incyte reported a solid quarter and provided satisfactory guidance for the sales of Jakafi and the launch of Niktimvo. However, the guidance for Opzelura did not meet expectations, and the company anticipates higher research and development spending. These factors, combined with the reaffirmation of uncertainties ahead of the critical phase III povo HS study readout, suggest that the recent strong performance of Incyte’s stock may not continue.
The analyst also noted that while the positive bioequivalence data for an extended-release formulation is encouraging, it may not be sufficient to sustain the stock’s momentum after its recent surge. Abrahams believes that the setup going into the first half of the year for the povo HS study appears mixed at current stock levels.
Looking further ahead, RBC Capital suggests that the second half of 2025 could offer better opportunities. This is when Incyte is expected to provide readouts from its pipeline, which may reveal underappreciated catalysts for the stock. Despite the reduction in the price target, RBC Capital has kept its Sector Perform rating unchanged, basing the new target on model updates. Currently trading at elevated multiples with a P/E ratio of 494.2, investors seeking deeper insights can access comprehensive valuation analysis and 8 additional ProTips through InvestingPro’s detailed research reports.
In other recent news, Incyte Corporation has been the subject of recent analyst activity. Citi analyst David Lebowitz lowered the stock price target to $88 from the previous $97, maintaining a buy rating, following Incyte’s fiscal year 2024 results and a lower than expected guidance for 2025. On the other hand, Stifel raised its price target for Incyte to $77 from $75 while maintaining a hold rating on the stock.
The company’s financial results for the fiscal year 2024 showcased a robust performance of its key product franchises, including Jakafi and Opzelura. However, Incyte’s guidance for 2025 fell short of expectations, prompting earnings estimates revisions.
Incyte also announced significant developments regarding its Jakafi extended release (XR) formulation, which met the FDA’s bioequivalence criteria in a recent study. An application for the new drug approval is anticipated to be filed before the end of 2025.
Despite the lower guidance for 2025, Incyte is gearing up for a dynamic period with plans to deliver results from four pivotal studies, launch four new drugs, and initiate three additional Phase 3 studies. These recent developments highlight the strategic importance for Incyte’s future growth and sustainability.
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