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Investing.com -- UCB S.A. shares rose more than 4% on Monday after analysts at Morgan Stanley (NYSE:MS) upgraded the stock to “overweight” from “equal weight,” citing strong growth prospects and an increasingly attractive risk-reward profile, in a note dated Monday.
Morgan Stanley said the recent pullback in UCB shares has not reflected the company’s underlying fundamentals.
The brokerage raised its price target on the stock to €220 from €200, supported by expectations of faster uptake for Bimzelx, UCB’s key immunology drug.
The analysts estimate Bimzelx sales of €1.5 billion for fiscal year 2025, well above the consensus of €1.36 billion.
Bimzelx has seen growing traction in psoriasis, and Morgan Stanley expects momentum to continue, bolstered by new indications such as psoriatic arthritis, axial spondyloarthritis and hidradenitis suppurativa (HS).
Analysts noted that UCB is likely to benefit from stronger U.S. market access and improved commercial coverage, which could help the company reach peak Bimzelx sales of €6 billion, potentially rising to €7 billion in a more optimistic scenario.
Morgan Stanley also pointed to robust script trends in the U.S., which they believe support further upside.
The brokerage forecasts UCB’s EBITDA to grow at a compound annual rate of 22% from 2025 to 2028, nearly double the average for sector peers.
Despite the premium valuation, the analysts argue it is justified given UCB’s stronger growth outlook and underappreciated pipeline.
The brokerage acknowledged ongoing concerns about U.S. policy risks and competition, particularly from MoonLake’s sonelokimab, which is in phase 3 trials for HS.
However, Morgan Stanley believes the competitive threat is overstated, citing trial design differences and the likelihood that multiple players can coexist in the expanding HS market, which could reach $9 billion at peak.
Pipeline developments in atopic dermatitis are another area of potential upside. UCB is expected to present data on two early-stage assets later this year, which Morgan Stanley views as important steps toward expanding the company’s footprint in dermatology.
The analysts added that UCB is at an “inflection point,” with upside potential of about 40% if earnings momentum continues and external pressures ease.