This Top Analyst Sees Incyte Corporation (INCY) Shares Have Significant Upside Ahead

After Incyte Corporation (NASDAQ:INCY) announced positive clinical pipeline updates that had investors celebrating and shares soaring 9%, top analyst Eric Schmidt at Cowen is out with a research report today singing the biotech firm’s praises. As such, the analyst reiterates an Outperform rating on shares of INCY without suggesting a price target.

For the analyst, the “most significant” piece of news yesterday lies in the firm’s choice to transition its drug candidate epacadostat, INCY’s investigational oral selective IDO1 inhibitor, under investigation with the combination of KEYTRUDA (pembrolizumab), Merck’s anti-PD-1 therapy, into pivotal development. The drug will be moved into Phase III combination studies in the following four tumor indications: bladder cancer, squamous cell carcinoma of the head and neck, non-small cell lung cancer (NSCL), and renal cell carcinoma (RCC).

Meanwhile, the firm also has Phase III trials ahead for its JAK1 and JAK2 inhibitor Jakafi in Essential Thrombocythemia, itacitinib in acute Graft versus host disease (GvHD), and baricitinib in psoriatic arthritis.

Additionally, INCY offered an encouraging financial update, boosting long-term Jakafi sales guidance from $1.5 billion in peak sales to $2 billion.

Schmidt sees these updates as strategic strides towards for the firm, explaining, “Investors had expected Incyte to begin making Phase III go/no-go decisions for epacadostat this quarter. Nonetheless, the announcement of 4 additional Phase III programs is somewhat surprising in breadth. In addition, a NSCLC decision had not been expected until more mature efficacy data was obtained later in 2017. Therefore, we interpret the early NSCLC decision as a particularly positive sign for this tumor type. While trial details have not been disclosed we anticipate all 4 trials will use PD-1/PD-L1 comparator arms since at least one PD-1/PD-L1 antibody is currently approved in each of the indications.”

Looking ahead, “We note that Cowen’s Pharmaceutical Team models the PD-1/PD-L1 class supporting WW sales of $34B across epacadostat’s 5 pivotal trial indications in 2022. Incyte is currently trading at a market cap of $20B. If epacadostat is able to realize a fraction of this market potential INCY shares could have significant upside,” Schmidt concludes.

Eric Schmidt has a very good TipRanks score having achieved a high ranking of #74 out of 4,350 analysts with a 59% success rate. Schmidt garners 20.2% in his annual returns. When recommending INCY, Schmidt yields 37.5% in average profits on the stock.

TipRanks analytics demonstrate INCY as a Strong Buy. Out of 11 analysts polled by TipRanks in the last 3 months, all 11 are bullish on Incyte stock. With a loss potential of 7%, the stock’s consensus target price stands at $109.75.

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