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On Friday, Citi reaffirmed its positive stance on UCB SA (Euronext:UCB), maintaining a Buy rating and setting a price target of EUR161.00. The firm highlighted UCB's strong performance year-to-date as a key factor in its high conviction for the stock. The optimism is based on UCB's growth prospects, with Citi projecting a compound annual growth rate (CAGR) for sales, EBITDA, and EPS of 11%, 27%, and 33% respectively from 2024 to 2029.
The financial institution attributes this growth to the better-than-expected performance of recent product launches including Bimzelx, Rystiggo, and Zilbrysq. Additionally, the ongoing contribution from Evenity is believed to be undervalued by the market. Citi also points to a prolonged period of strength for Cimzia, as risks related to biosimilars are expected to be deferred.
UCB's pipeline is considered to offer significant potential against modest market expectations, paired with a valuation that Citi deems unexacting. The firm further emphasizes the added value from UCB's royalty interests in Merck's phase III oral PCSK9 inhibitor, MK-0616, and Sanofi (NASDAQ:SNY)'s oral TNF modulator, SAR441566, both of which are seen as having considerable sales potential.
The recent FDA approval of Niktimvo (axatilimab) for chronic graft-versus-host disease is also noted as a positive development for UCB. The company stands to gain up to $0.4 billion in milestones and a low double-digit percentage of royalties on sales. With Niktimvo's peak sales estimated at $0.7 billion, Citi suggests there is an underrecognized net present value (NPV) upside for UCB that could be as much as €7 per share.
In other recent news, UCB SA continues to draw attention from financial analysts, with Barclays expressing optimism about the company's growth prospects. Barclays upgraded its price target from €150.00 to €160.00, maintaining an Overweight rating.
Recent developments, such as Biogen (NASDAQ:BIIB) returning the biosimilar Cimzia rights to Xbrane and the opportunity for UCB to reclaim the Japan rights for Cimzia from Astellas in 2026, also contribute to the promising outlook.
Additionally, Barclays expressed caution regarding a potential sales decline in the first half of 2024, despite the overall positive outlook. These assessments reflect the most recent developments in UCB's financial trajectory.
InvestingPro Insights
UCB SA (Euronext:UCB) is capturing the attention of investors with its promising growth trajectory and robust product pipeline. As Citi maintains a bullish outlook, real-time data from InvestingPro aligns with the positive sentiment surrounding the company. UCB's market capitalization stands at a significant $31.96 billion, reflecting investor confidence in its market position. Despite a high price-to-earnings (P/E) ratio of 121.79, which some might view as a premium valuation, the company's net income is expected to grow this year, suggesting that the market is optimistic about its future earnings potential.
InvestingPro Tips that are particularly pertinent to UCB's current situation include the company's impressive record of raising its dividend for 15 consecutive years and maintaining dividend payments for 45 consecutive years. This consistency underlines UCB's financial stability and commitment to shareholder returns. Additionally, the stock is noted for its low price volatility, which could appeal to investors seeking a more stable equity investment.
Investors seeking more detailed analysis can find additional InvestingPro Tips on UCB at https://www.investing.com/pro/UCBJY. Currently, there are 14 more tips available, offering deeper insights into the company's financial health and market performance.
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