Bullish indicating open at $55-$60, IPO prices at $37
On Wednesday, Stifel analysts initiated coverage on Ligand Pharmaceuticals , traded on (NASDAQ:LGND), with a positive outlook, assigning a Buy rating and setting a price target of $143.00. Currently trading at $104.10, the stock has garnered strong analyst support, with InvestingPro data showing analyst targets ranging from $135 to $157, suggesting significant upside potential. The firm highlighted Ligand's strategic role in the biopharmaceutical industry, particularly in the context of the current inconsistent financing environment.
Ligand Pharma is recognized for offering differentiated capital through royalty-financing deals, which are particularly appealing to mid-to-late stage biopharma companies in need of non-dilutive funding. Stifel's analysis points out that Ligand not only provides essential capital but also acts as a technology partner and incubator for innovative treatments. The company's strong financial position is evident in its impressive current ratio of 8.93 and minimal debt-to-equity ratio of 0.01, according to InvestingPro data. This approach helps to advance therapies that might otherwise struggle in the challenging development landscape.
The company has managed to create one of the most diverse portfolios of royalty revenues, spanning various therapeutic areas. This diversification allows for de-risked exposure to the biopharma development sector. The strategy appears to be working, with revenue growing 27.3% in the last twelve months to $167.1 million, maintaining an impressive gross profit margin of 80.6%. According to Stifel, this is a significant advantage, as royalty financing accounts for less than 5% of biopharma investing, indicating a large untapped market potential.
Stifel's commentary underscores Ligand's position in a space that remains largely unexplored, providing the company with substantial growth prospects. The firm projects that Ligand's growth could exceed 20% through 2029. For investors seeking deeper insights, InvestingPro offers additional analysis through its comprehensive Pro Research Report, which includes detailed valuation metrics, growth projections, and over 10 key ProTips about Ligand's financial health and market position. Furthermore, Ligand's unique business model is seen as a protective buffer against the typical volatility associated with the biopharma industry.
The initiation of coverage by Stifel with a Buy rating and a price target of $143.00 reflects confidence in Ligand Pharma's business strategy and its potential for sustained growth within the biopharmaceutical sector.
In other recent news, Ligand Pharmaceuticals reported a robust financial performance for the fourth quarter of 2024, with total revenue and other income reaching approximately $42.8 million. This figure surpassed the consensus estimate of $39.0 million, marking a 52% increase year-over-year. The company's adjusted core earnings per share (EPS) for the quarter was $1.27, outperforming the consensus estimate of $1.19. Ligand's management reaffirmed their guidance for 2025, projecting revenues between $180 million and $200 million, alongside an adjusted core EPS forecast of $6.00 to $6.25 per share.
RBC Capital Markets analyst Douglas Miehm raised the price target for Ligand Pharmaceuticals to $153, maintaining an Outperform rating on the company's shares. This adjustment reflects the updated consensus forecasts for Ligand's portfolio and recent strategic transactions. Ligand ended 2024 with $256 million in cash and investments, positioning itself well for future growth. The company also highlighted its strategic focus on expanding its commercial portfolio and reducing operational expenses. Ligand is expected to achieve several significant milestones in 2025, including the mid-year launch of Zelsuvmi, which is anticipated to be a value-creating event.
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