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RBC Capital adjusted its outlook on BioMarin Pharmaceutical Inc. (NASDAQ: NASDAQ:BMRN), reducing the stock's price target to $85 from the previous $100 while retaining a Sector Perform rating. The adjustment follows the release of Phase III clinical trial data by a competitor, which could potentially impact BioMarin's market share.
The competitor's study reported a significant improvement in annualized growth velocity for patients with achondroplasia, a bone growth disorder. The trial achieved its primary endpoint, showing an increase of 1.49 cm/year over placebo, with notable efficacy in different age groups. The results demonstrated a clean safety profile and additional benefits in secondary endpoints, including quality of life improvements.
BioMarin's product, Voxzogo, which is indicated for the same condition, may encounter substantial competition from the new entrant, which boasts less frequent dosing and potentially comparable, if not superior, efficacy. The new data indicated a 1.78 cm/year improvement in older children, slightly above Voxzogo's 1.57 cm/year as stated on its label.
The market's reaction to BioMarin's stock was deemed potentially exaggerated by RBC Capital, but the firm acknowledged that the stock's downside risk might be limited at current levels. Despite this, they cited a lack of significant near-term catalysts that could reverse investor sentiment, leading to the decision to lower the price target.
RBC Capital's stance remains cautious due to the anticipated competitive landscape for BioMarin's Voxzogo, as the company faces a new drug with less frequent dosing requirements and possibly better or similar efficacy. This competitive pressure has prompted the firm to reassess the valuation of BioMarin's shares.
In other recent news, BioMarin Pharmaceutical Inc. posted a record total revenue of $712 million and increased its full-year revenue guidance to between $2.75 billion and $2.825 billion. The company has set ambitious financial targets for 2027, including a revenue goal of $4 billion and Non-GAAP Operating Margins reaching the low-to-mid 40% range.
BioMarin also announced executive transitions, with Dr. Greg Friberg succeeding Dr. Henry J. Fuchs as the new Executive Vice President, Chief Worldwide Research and Development Officer, and James Sabry appointed as the new Executive Vice President, Chief Business Officer.
Analysts from BMO Capital and TD Cowen have maintained positive stances on BioMarin, reiterating Outperform and Buy ratings with price targets of $115 and $120 respectively.
Piper Sandler increased its price target for BioMarin to $122, maintaining an Overweight rating, while Scotiabank revised BioMarin's stock target to $95, maintaining a Sector Perform rating. Canaccord Genuity maintained a Hold rating on BioMarin shares with a steady price target of $93.00.
InvestingPro Insights
In light of RBC Capital's revised outlook on BioMarin Pharmaceutical Inc. (NASDAQ: BMRN), it's pertinent to consider additional financial metrics and analysis from InvestingPro. With a market capitalization of $13.3 billion and a P/E ratio of 51.39, BioMarin trades at a premium based on its earnings. However, the company's PEG ratio, which stands at 0.34, suggests that its price may be reasonable relative to its expected earnings growth. This aligns with an InvestingPro Tip that points out the stock is trading at a low P/E ratio relative to near-term earnings growth. Moreover, the company's revenue has grown by 15.83% over the last twelve months as of Q2 2024, signaling a strong financial performance.
InvestingPro Tips also highlight that BioMarin's cash flows can sufficiently cover its interest payments, and its liquid assets exceed short-term obligations, indicating a solid financial position. Additionally, analysts predict the company will be profitable this year, with six analysts revising their earnings upwards for the upcoming period, which may reassure investors concerned about the competition's impact on market share.
For investors seeking further insights and analysis, there are over ten additional InvestingPro Tips available for BioMarin, providing a comprehensive understanding of the stock's potential and risks. These tips are accessible through the InvestingPro platform and offer valuable guidance for those considering an investment in the biopharmaceutical sector.
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