Street Calls of the Week
Investing.com - UBS has raised its price target on Royalty Pharma (NASDAQ:RPRX) to $38.00 from $37.00 while maintaining a Neutral rating on the stock. The new target aligns closely with the stock’s 52-week high, while InvestingPro data shows RPRX has delivered an impressive 40.48% return year-to-date.
The price target increase follows Royalty Pharma’s recent Investor Day, though UBS analyst Ashwani Verma indicated the firm continues to "remain on the sidelines for the stock" due to perceived "structural issues in the equity story." According to InvestingPro analysis, the company maintains a GREAT financial health score and trades at an attractive PEG ratio of 0.27, suggesting potential value relative to its growth prospects.
UBS noted that while Royalty Pharma’s business fundamentals "continue to be strong," the firm maintained its Neutral stance on the shares.
The revised price target is based on an unchanged 10x EV/EBITDA multiple applied to a slightly increased 2026 EBITDA estimate of $3.06 billion, up from the previous estimate of $3.02 billion.
The EBITDA adjustment reflects the inclusion of newly added royalty deals with Amgen and Zenas, as well as Royalty Pharma’s recent debt offering, according to UBS.
In other recent news, Royalty Pharma reported robust second-quarter results, with portfolio receipts totaling $727 million, surpassing both BofA Securities and consensus estimates by 7% and 6%, respectively. This performance was bolstered by mature products and new launches such as Rytelo and Skytrofa. Following these results, BofA Securities increased its price target for Royalty Pharma from $42 to $48, while maintaining a Buy rating. Additionally, Royalty Pharma entered into a significant agreement with BeOne Medicines, acquiring a royalty interest in Amgen’s cancer treatment Imdelltra for an upfront payment of $885 million. The deal provides BeOne with an option to sell additional royalties for up to $65 million within the next year. In corporate governance news, Henry Fernandez has stepped down as the Lead Independent Director of Royalty Pharma’s Board of Directors. Meanwhile, TD Cowen has reiterated its Buy rating for Royalty Pharma, highlighting the company’s strong performance metrics since becoming public.
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