Following a KOL discussion of Car-T therapies coupled with this week’s encouraging clinical update on the ZUMA-1 trial in Non-Hodgkin’s lymphoma (LMA), top analyst David Nierengarten at Wedbush has emerged with even greater confidence on Kite Pharma Inc (NASDAQ:KITE). As such, the analyst reiterates a Neutral rating on shares of KITE while raising the price target from $46 to $60, which implies a potential downside of 18% downside from current levels.
Nierengarten opines, “Updated ZUMA-1 results provide sufficient basis for approval with a 31% CR rate in DLBCL at 6 months, however we consider shares fully valued considering market opportunity and likely gradual launch. We could be more constructive on the shares with higher-than-expected pricing (our estimate is for $325,000 per treatment) or a faster-than-expected sales ramp despite the anticipated, complex launch of the autologous cell product.”
Regarding whether there is possible “room for improvement,” the analyst continues, “Management noted, and it is probable that the currently reported 31% DLBCL complete response rate could improve with the conversion or follow up of several patients. However, we do not expect that to change the available patient population. Furthermore, we note to justify the current market capitalization, we would require either a price point of $500,000 per course or up to 50% market share (or some combination), both of which, while possible, we believe is less likely.”
For the fourth quarter, KITE posted EPS of ($1.70), which fell “in-line” with the analyst’s expectations of ($1.68) as well as consensus of ($1.75). The biotech firm closed the quarter with $414 million in cash and equivalents while guiding to cash burn between $325 million and $340 million for this year. Nierengarten anticipates the firm will close this quarter with close to $785 million in cash and equivalents, which he concludes should be “sufficient to fund operations to late 2018 in our view.”
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, top five-star analyst David Nierengarten has achieved a high ranking of #73 out of 4,513 analysts. Nierengarten upholds a 55% success rate and realizes 31.8% in his annual returns. When suggesting KITE, Nierengarten earns 0.0% in average profits on the stock.
TipRanks analytics demonstrate KITE as a Buy. Out of 13 analysts polled by TipRanks in the last 3 months, 9 are bullish on Kite stock and 4 remain sidelined. With a return potential of nearly 2%, the stock’s consensus target price stands at $76.50.
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