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On Monday, UBS analyst Ashwani Verma revised the price target on Neurocrine Biosciences (NASDAQ:NBIX) to $137.00, down from the previous $154.00, while maintaining a Buy rating on the company’s shares. Verma’s reassessment comes amid a general reevaluation of biotech stocks, taking into account the current industry climate and recent market trends. The stock has experienced a significant 24.6% decline year-to-date, and according to InvestingPro analysis, the company appears undervalued at current levels, with 8 additional exclusive insights available to subscribers.
Neurocrine Biosciences, known for its neurological and endocrine-related treatments, has been recognized by UBS for its favorable risk/reward balance in the current biotech environment. Verma highlighted that the company’s lack of regulatory exposure for over a year makes it a particularly appealing investment. The focus for Neurocrine Biosciences is on the growth trajectory of Ingrezza, its key product for treating tardive dyskinesia, and the initial market response to Crenessity, its latest offering.
The adjustment in the price target reflects a slight change in the expected sales multiple, from 4.2 times to 4.0 times the enterprise value to estimated 2030 sales, which remains unchanged at $2.9 billion. This change is attributed to a broader contraction of multiples within the biotech sector. Additionally, a marginally higher share count was factored into the new target price. Current financial metrics from InvestingPro show the company trading at a P/E ratio of 28.1x, with strong revenue growth of 24.8% in the last twelve months and an impressive financial health score. Get access to the comprehensive Pro Research Report for deeper insights into NBIX’s valuation metrics and growth potential.
Verma also drew attention to the manufacturing locations of Ingrezza and Teva’s Austedo, a competing product, noting that Ingrezza is contract-manufactured in the pan-European region, while Austedo is produced in Florida, USA. The geographical distinction may influence the market dynamics between the two products.
The report suggests that the first quarter of 2025 is shaping up to be less challenging for Neurocrine Biosciences compared to the fourth quarter of 2024, which saw significant sell-offs due to the M4 failure and the fourth-quarter update. Looking ahead, UBS anticipates that the first half of 2025 will be driven by high-frequency trading, with low-frequency support potentially increasing as investors reassess the company following the previous year’s setbacks. The company maintains strong fundamentals with a current ratio of 3.4x and operates with moderate debt levels, according to InvestingPro data, suggesting solid financial positioning for future growth.
In other recent news, Neurocrine Biosciences announced the appointment of Dr. Sanjay Keswani as its new Chief Medical (TASE:BLWV) Officer, succeeding Dr. Eiry W. Roberts, who will transition to a strategic advisory role. This leadership change comes as the company continues to expand its therapeutic modalities. Stifel analysts have adjusted their first-quarter sales estimates for Neurocrine’s Ingrezza, reflecting a more cautious stance, while RBC Capital Markets has reduced its price target for Neurocrine Biosciences to $139, citing increased stringency in payer coverage for Ingrezza.
Neurocrine also shared promising results from a study on INGREZZA, showing potential for long-term remission of tardive dyskinesia symptoms in a significant number of patients. The KINECT 4 clinical trial revealed that 59.2% of participants achieved remission after 48 weeks of treatment. Additionally, Neurocrine has initiated a Phase 1 clinical trial for NBI-1140675, a new VMAT2 inhibitor aimed at treating neurological and neuropsychiatric conditions.
Stifel’s analysis of Crenessity, a treatment for congenital adrenal hyperplasia, indicates cautious optimism among physicians, with a projected 40% market penetration in pediatrics over two years. Meanwhile, RBC Capital’s analysis highlights potential challenges for Ingrezza due to payer coverage changes, which could impact both immediate and long-term demand. These developments underscore the dynamic landscape Neurocrine Biosciences navigates as it continues to develop treatments for neurological disorders.
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