Goldman Sachs analyst Salveen Richter came out today with new ratings and price targets on a handful of biotechnology stocks. Lets take a look and see what Richter has to say about bluebird bio Inc (NASDAQ:BLUE), Kite Pharma Inc (NASDAQ:KITE), and Incyte Corporation (NASDAQ:INCY).
bluebird bio Inc
Richter initiated coverage on shares of bluebird bio, with a Buy rating and a price target of $165, which implies an upside of 95% from current levels.
Richter wrote, “We initiate on BLUE with a Buy rating, given its leading position in the highly innovative gene therapy space (designed for one-shot cure), and abundant catalysts over the next 12 months, starting with the upcoming ASH meeting (Dec 5-8). Current share levels (62% off the July peak) represent an attractive entry point, as we believe fundamentals of the company are intact.”
Furthermore, “The key value driver is LentiGlobin for rare blood disorders, beta-thalassemia ($1bn peak sales) and sickle cell disease ($3bn peak sales), with encouraging proof-of-concept data in hand. Lenti-D is a Phase II/III gene therapy product tested for the rare neurological disorder, childhood cerebral adrenoleukodystrophy (CCALD), with interim data expected in 2016 ($179mn sales). Moreover, BLUE boasts an immuno-oncology platform for engineered T cells, as well as gene editing capabilities.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Salveen Richter has a total average return of 31.7% and a 68.8% success rate. Richter has a -25.6% average return when recommending BLUE, and is ranked #64 out of 3849 analysts.
Kite Pharma Inc
Next up is Kite Pharma. The analyst initiated a Buy rating on the stock, while issuing a price target of $111, which represents a potential upside of 28% from where the stock is currently trading.
In explaining his positive Buy rating, Richter noted,”Our Buy rating is based on 1) multiple catalysts for key drug KTE-C19 through YE 2016, and 2) pipeline data, particularly in solid tumors, which could drive upside in 2016. KITE is developing cell-based cancer therapies through its engineered T-cell (immune cell that fights infection) platform: CAR Ts and TCRs. Kite’s lead CAR T candidate, KTE-C19 for blood cancer, could achieve FDA approval in H2 2017 (est. $1.9bn peak sales in 2026), in our view. Initial proof-of-concept data from TCRs and CAR Ts in solid tumors could be a major upside driver by mid-2016. We like Kite’s strategy of advancing a drug quickly, while expanding the pipeline and optimizing second-generation versions, with in-licensed technologies/partnerships.”
Out of the 8 analysts polled by TipRanks in the last 3 months, 6 rate Kite Pharma stock a Buy, while 2 rate the stock a Hold. With a return potential of nearly 3%, the stock’s consensus target price stands at $89.43.
Last but not the least, Richter initiated coverage on shares of Incyte, with a Buy rating and a price target of $135, which represents a potential upside of 15.5% from where the stock is currently trading.
The analyst commented, “We initiate on INCY with a Buy rating, as we expect a path to profitability in 2017, and as the company advances its broad immuno-oncology (IO) pipeline. Lead drug Jakafi is on track for $2bn in U.S. sales (NVS partnership ex-U.S.), and we expect revenue stream diversification with baricitinib (LLY partnership) with market entry in rheumatoid arthritis (RA) likely in late-16/early-17.”
“The key value driver is late-stage IO drug IDO, with a pivotal path in melanoma, and multiple combination studies/potential pivotal decisions to emerge in H1/16. INCY’s early stage pipeline comprises both biologics (next wave of IO drugs) and small molecules (company’s core competency in medicinal chemistry), and we believe INCY will emerge as a major player in the dynamic IO field,” the analyst added.
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