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On Friday, Wells Fargo (NYSE:WFC) downgraded United Therapeutics Corp . (NASDAQ:UTHR) stock rating from Overweight to Equal Weight and lowered the price target to $314 from the previous $395. The adjustment follows a detailed review by the analysts at Wells Fargo, who explored multiple aspects of United Therapeutics’ TETON program. According to InvestingPro data, UTHR maintains excellent financial health with a perfect Piotroski Score of 9 and impressive gross profit margins of 89%.
The downgrade was prompted by concerns regarding the potential efficacy of the TETON program. According to Wells Fargo, while the program has its merits, there are challenges in proving its success if the efficacy observed is not due to an actual antifibrotic effect. The analysts expressed difficulty in finding counterarguments that would alleviate the risk that the observed efficacy was merely a result of improvements in pulmonary hypertension (PH) or was simply incidental. Despite these concerns, InvestingPro analysis suggests the stock is currently undervalued, trading at a P/E ratio of 13.
Wells Fargo’s decision to remove the TETON program from its model reflects the uncertainty surrounding the program’s outcomes. The analysts scrutinized three variables in their review, seeking to understand both the positive and negative perspectives of each.
The new price target of $314 signifies a notable reduction from the previous target of $395. This change in price target is indicative of the analysts’ reassessment of the TETON program’s value to United Therapeutics’ overall portfolio and its future revenue potential.
The market will likely observe the impact of Wells Fargo’s rating and price target adjustment on United Therapeutics’ stock performance. The company’s shares will continue to be monitored by investors as they assess the implications of the Wells Fargo report on their investment decisions. With analyst targets ranging from $314 to $600, investors seeking deeper insights can access the comprehensive Pro Research Report available on InvestingPro, which includes 12 additional key insights about UTHR’s financial health and growth prospects.
In other recent news, United Therapeutics Corporation reported its fourth-quarter 2024 earnings, which fell short of expectations. The company posted an earnings per share (EPS) of $6.19, below the anticipated $6.68, while revenue reached $735.9 million, slightly under the forecasted $739.92 million. Despite this miss, United Therapeutics achieved record annual revenue growth for the third consecutive year, with a 24% increase over 2023. Key products such as Tyvaso and Orenitram showed strong revenue increases of 19% and 28%, respectively.
In addition, BofA Securities upgraded United Therapeutics from Underperform to Neutral, with expectations that first-quarter revenues will align closely with consensus estimates, forecasting $734 million. Meanwhile, Goldman Sachs adjusted its price target for the company to $293 from $302, maintaining a Neutral rating due to a modest reduction in Tyvaso forecasts and increased research and development spending. The company is also navigating new mandatory manufacturer discounts under the Inflation Reduction Act, which are expected to have a limited financial impact. United Therapeutics continues to advance its pipeline with significant clinical trial progress, including the anticipated first UKidney transplant in mid-2025.
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