XOMA stock holds $104 target despite earnings miss

On Wednesday, H.C. Wainwright maintained a Buy rating on XOMA Ltd . (NASDAQ:XOMA) shares, with a steadfast price target of $104.00, representing significant upside potential from current levels. The biotechnology company reported its 2024 financial results, revealing a GAAP EPS of ($1.65), which fell short of the estimated ($0.40). The company’s full-year revenue reached $28.5 million, slightly below the forecast of $30.8 million, though InvestingPro data shows an impressive revenue growth of 498.72% over the last twelve months, with a remarkable gross profit margin of 89.91%.

The firm’s analysts pointed out that the earnings discrepancy primarily stemmed from the expected changes in partnered deals, including expenses related to the acquisitions of Kinnate and Pulmokine, as well as credit losses from the Talphera transaction. Despite these factors, XOMA concluded the year with a robust cash position of $106.8 million. According to InvestingPro analysis, the company maintains strong liquidity with a current ratio of 5.15, indicating its liquid assets well exceed short-term obligations.

The company’s revenue generation was supported by royalties and milestones from its strategic transactions, which are part of XOMA’s efforts to expand its royalty portfolio. In 2024, XOMA committed $65 million to strategic transactions aimed at fostering long-term growth and distributed $5.5 million in dividends to preferred shareholders.

H.C. Wainwright highlighted several key drivers of revenue growth for XOMA, including Vabysmo, which dominated with approximately $2.94 billion in sales for 2024, providing XOMA with a 0.5% royalty. The newly launched Ojemda also showed promising early results with $57.3 million in revenue and mid-single digit royalties, in addition to $22.1 million received from milestone payments. Moreover, Miplyffa, released in November 2024, generated $10.1 million in revenue and offers a mid-single digit royalty to XOMA, with the potential for $52.6 million in milestone payments.

In light of the current financial market challenges and fundraising difficulties, the analyst suggested that it is an opportune time for companies to explore financing through royalty transactions. The reaffirmed Buy rating and price target reflect confidence in XOMA’s strategic approach and potential for continued growth. Trading near its 52-week low of $19.92, InvestingPro analysis suggests XOMA is currently undervalued, with analyst targets ranging from $55 to $104. Discover more valuable insights and 8 additional ProTips about XOMA’s financial health and growth potential with an InvestingPro subscription.

In other recent news, XOMA Ltd. has seen significant developments regarding its financial prospects and partnerships. H.C. Wainwright maintained a Buy rating on XOMA but adjusted the price target from $123.00 to $104.00, citing the exclusion of iscalimab from their projections. Despite this adjustment, H.C. Wainwright continues to express confidence in XOMA’s robust royalty portfolio, which provides stability against potential negative news from partnered programs. Additionally, XOMA’s partner, Rezolute (NASDAQ:RZLT), announced that their drug candidate RZ358, also known as ersodetug, received Breakthrough Therapy Designation from the FDA for treating congenital hyperinsulinism. This has prompted H.C. Wainwright to reaffirm a Buy rating and a $123.00 price target on XOMA’s shares. The Phase 2b RIZE study for RZ358 showed promising results, with a significant reduction in hypoglycemia events, paving the way for the upcoming Phase 3 sunRIZE study. If approved, XOMA could receive substantial royalties from RZ358, adding to its growing revenue stream. The potential market launch for RZ358 is projected for 2027, with estimated peak sales of $300 million.

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