Spring Works stock rating cut to Hold at TD Cowen

Tuesday, Spring Works Therapeutics shares saw a change in their stock rating, as TD Cowen downgraded the company from Buy to Hold. The firm also reduced the price target on Spring Works to $47.00 from the previous $66.00. The stock, currently trading at $46.18, has shown remarkable momentum with a 14% gain in the past week and over 53% surge in the last six months. According to InvestingPro analysis, the company maintains impressive gross profit margins of 93.45%. The downgrade comes in response to the proposed acquisition of Spring Works by Merck (NSE:PROR) KGaA, a move that TD Cowen analysts believe complements Merck’s progress in rare tumors without any pipeline overlap.

Spring Works Therapeutics’ portfolio is expected to bolster Merck KGaA’s presence in the United States and assist in expanding the reach of Ogsiveo/Gomekli into markets outside the U.S. TD Cowen views the acquisition as a mutually beneficial arrangement for both companies involved.

The analysts at TD Cowen have expressed their opinion that a competing bid surpassing Merck KGaA’s offer is unlikely to emerge. As such, they anticipate the acquisition will proceed as planned and finalize in the second half of 2025. The adjustment in Spring Works’ stock rating and price target reflects the anticipated completion of the deal within the given timeframe.

The merger is poised to enhance Merck KGaA’s oncology portfolio, particularly in the area of rare tumors, an area where Spring Works Therapeutics has been actively developing treatments. With the acquisition, Merck KGaA aims to strengthen its foothold in the U.S. market and leverage Spring Works’ assets to expand internationally.

Investors and market watchers will be keeping a close eye on the progression of this acquisition, as it represents a significant strategic move for both Spring Works Therapeutics and Merck KGaA in the competitive pharmaceutical landscape.

In other recent news, SpringWorks Therapeutics has been at the center of several notable developments. The company received FDA approval for its drug GOMEKLI, aimed at treating neurofibromatosis type 1 with symptomatic plexiform neurofibromas, a significant milestone that includes a rare pediatric disease priority review voucher. Analysts from TD Cowen have responded positively, raising their price target for SpringWorks to $66, highlighting GOMEKLI’s differentiated safety profile compared to AstraZeneca (NASDAQ:AZN)’s Koselugo. Meanwhile, Barclays (LON:BARC) has maintained an Overweight rating with a $63 price target, emphasizing the potential EU approval of SpringWorks’ drug Ogsiveo for desmoid tumors as a crucial step forward.

Additionally, H.C. Wainwright has reiterated a Buy rating with a $74 target, focusing on the anticipated European Medicines Agency decision regarding Ogsiveo. The CHMP’s recent meeting included Ogsiveo on its agenda, which could influence a potential acquisition by Merck KGaA, currently in advanced talks with SpringWorks. Merck KGaA has acknowledged these discussions, although no binding agreement has been reached yet. The acquisition talks highlight the strategic interest in SpringWorks’ growing portfolio, particularly as the company transitions into a commercial-stage entity. These developments underscore SpringWorks’ ongoing efforts to expand its market presence and deliver innovative treatments for rare diseases and cancer.

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