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Citi has adjusted its price target on shares of Ascendis Pharma (NASDAQ: NASDAQ:ASND), bringing it down from $193.00 to $178.00, while retaining a Buy rating on the stock.
The revision followed Ascendis Pharma's report of its second-quarter financials for 2024, which fell short of Wall Street's revenue and GAAP EPS expectations. The underperformance was attributed to significant accounting adjustments made by the company to align previous Skytrofa pricing agreements with payors.
Ascendis Pharma's management has consequently revised its full-year 2024 guidance for Skytrofa, reducing it by approximately 30% to a new range of €220-€240 million.
Despite the lowered expectations for Skytrofa, Ascendis is making progress with its Yorvipath franchise, which has seen growth in its second quarter of sales. Moreover, the company has secured approval from the U.S. Food and Drug Administration (FDA) for Yorvipath in August.
Looking ahead, Citi anticipates important developments from Ascendis Pharma's pipeline, including Phase 3 data for TransCon CNP expected in the upcoming weeks. Further updates on the company's pipeline are projected through the end of the year.
In other recent news, Ascendis Pharma's drug Yorvipath received approval from the U.S. Food and Drug Administration for the treatment of hypoparathyroidism in adults. The milestone was followed by a $150 million royalty agreement with Royalty Pharma, which includes a 3% royalty on U.S. net sales of Yorvipath.
However, Ascendis Pharma's second-quarter financial results for 2024 reported lower-than-expected sales of Skytrofa, leading to a reduction in the stock's price target by Goldman Sachs from $195 to $180, while maintaining a Buy rating.
Despite this, the firm remains optimistic about Ascendis Pharma's prospects, especially with the upcoming U.S. launch of Yorvipath and a newly announced royalty agreement. Other analyst firms, including JPMorgan, TD Cowen, and Stifel, have also updated their outlooks on Ascendis, indicating positive expectations for the company's future.
InvestingPro Insights
As Ascendis Pharma navigates through its financial adjustments and pipeline developments, key metrics from InvestingPro provide a snapshot of the company's current financial health. With a market capitalization of approximately $7.72 billion and a challenging P/E ratio of -12.74, reflecting investor skepticism about near-term earnings, the company's valuation picture is complex. The adjusted P/E ratio for the last twelve months as of Q1 2024 stands at -13.95, highlighting the market's continued concerns about profitability.
InvestingPro Tips indicate that Ascendis Pharma is trading at a high revenue valuation multiple and analysts do not anticipate the company will be profitable this year. The company's short-term obligations also exceed its liquid assets, which could pose liquidity risks. On the upside, Ascendis has managed to operate with a moderate level of debt and has shown a high return over the last decade. It's important to note that the company does not pay a dividend, which may influence investment decisions for income-focused shareholders.
Revenue growth has been impressive, with a staggering 322.18% increase over the last twelve months as of Q1 2024, and a quarterly growth rate of 185.49%. However, the company's operating income margin stands at -109.72%, signaling that despite increasing revenues, profitability remains elusive. For investors interested in Ascendis Pharma's growth trajectory and financial status, additional InvestingPro Tips are available, offering deeper insights into the company's performance and potential.
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