XOMA stock price target cut to $104 by H.C. Wainwright

On Monday, H.C. Wainwright maintained a Buy rating on XOMA Ltd . (NASDAQ: NASDAQ:XOMA) but reduced the price target for the company’s shares from $123.00 to $104.00. Currently trading at $26.61, the stock sits well below analyst targets ranging from $55 to $123. The adjustment in the price target was attributed to the exclusion of iscalimab from the firm’s projections. Despite this change, the research firm continues to support the stock with a positive outlook.

The rationale behind maintaining the Buy rating, as explained by H.C. Wainwright, is XOMA’s robust royalty portfolio which provides a form of protection against potential negative news from partnered programs. This diversified approach is seen as a key strength for the company, as it helps to mitigate the impact of unfavorable developments on the stock’s performance. The company’s impressive gross profit margin of 90.58% underscores the efficiency of its royalty-based business model.Want deeper insights into XOMA’s financial health? InvestingPro offers exclusive analysis and additional metrics to help you make informed investment decisions.

H.C. Wainwright’s analyst emphasized the value of a broad portfolio in the biotechnology sector, where XOMA operates. The company’s business model involves acquiring and managing royalty income from various drug development partnerships. This strategy has been highlighted as a significant advantage, offering a buffer against the volatility often associated with clinical trials and drug approvals.

The decision to lower the price target to $104 was made after careful consideration of the company’s financial prospects. According to InvestingPro data, XOMA’s overall financial health score is rated as FAIR, with strong momentum metrics despite current unprofitability. The exclusion of iscalimab, one of the products previously included in H.C. Wainwright’s financial models, necessitated a revision of the expected future earnings and, consequently, the price target.

XOMA’s business model and the way it handles the inherent risks of the biotech industry continue to be a focal point for H.C. Wainwright’s analysis. The company’s strong liquidity position, with a current ratio of 7.52 and moderate debt levels, supports its risk management strategy. The company’s approach to mitigating the typical downside risks associated with drug development has been acknowledged as a prudent strategy in the face of an unpredictable market.

In other recent news, XOMA Corporation has been garnering attention for several significant developments. The company’s partner, Rezolute (NASDAQ:RZLT), recently announced that their drug candidate ersodetug (RZ358) received Breakthrough Therapy Designation (BTD) by the FDA for the treatment of congenital hyperinsulinism (CHI), following successful results in the Phase 2b RIZE study. Analysts at H.C. Wainwright have reaffirmed a Buy rating on XOMA shares, noting potential for 10%+ revenue growth from RZ358.

In addition, XOMA has made a strategic acquisition of Pulmokine Inc., along with its stake in seralutinib, a drug currently in development for treating pulmonary arterial hypertension (PAH). This acquisition, which is XOMA’s second whole company acquisition in 2024, could potentially bring in low-to-mid single digit royalties and up to $25 million in milestone payments. H.C. Wainwright has consequently boosted XOMA’s price target to $123 from $117.

Furthermore, XOMA’s newly FDA-approved drug, Miplyffa, developed by Zevra Therapeutics for the treatment of Niemann-Pick type C, is set to provide a mid-single digit royalty and up to $52.6 million in milestone payments. This marks the addition of the sixth commercial asset to XOMA Royalty’s portfolio. These recent developments underline XOMA’s continued growth and potential in the pharmaceutical sector.

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