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Incyte (INCY) Shares Remain Attractive, Says Top Analyst


This morning, Incyte (NASDAQ:INCY) announced that the company’s ECHO-301 study comparing epacadostat in combination with pembrolizumab with pembrolizumab alone in melanoma failed to meet the primary endpoint of progression-free survival (PFS), with the overall survival (OS) not likely to be met either. Incyte shares reacted to the news, diving nearly 23% to close the day at $64.02.

However, Cowen’s top healthcare analyst Eric Schmidt sees better days ahead for the cancer drug maker. The analyst noted, “While this is clearly a disappointing result, removal of epacadostat should enhance near-term profitability. Today’s lower valuation has support from Jakafi, and Incyte’s broad oncology pipeline makes INCY shares attractive, in our view.”

Looking forward, in order to cut R&D spending, the analyst is hopeful that management will dramatically reduce if not eliminate much of its epacadostat expenditures.

“We are updating our model to remove epacadostat sales in melanoma, the one indication that we had previously included. We have also trimmed our SG&A and R&D expense estimates. These changes enhance profitability in 2018-2020, but reduce earnings in the out years.” the analyst added.

Net net, Schmidt reiterates an Outperform rating on Incyte shares, without providing a price target.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Eric Schmidt has a yearly average return of 41.9% and a 59% success rate. Schmidt has a 13.4% average return when recommending INCY, and is ranked #18 out of 4767 analysts.

The Street largely seems to echo Schmidt’s positive sentiment on the biotech firm, considering TipRanks analytics showcase INCY as a Buy. Out of 11 analysts polled in the last 3 months, 8 are bullish on Incyte stock, while 3 remain sidelined. With a potential upside of 104%, the stock’s consensus target price stands at $130.43.

Incyte is a Wilmington, Delaware-based biopharmaceutical company focused on the discovery, development and commercialization of proprietary therapeutics.