Alexion Pharma Downgraded Despite Progress in Pipeline
Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) is a biopharmaceutical company that focuses on creating treatments for rare diseases. Alexion last released quarterly earnings on October 23rd, when they posted $555.1 million in net product sales, marking a 39% year-over-year increase. The company posted GAAP earnings per share of $0.88, an 87% year-over-year increase.
On December 30th, Alexion announced that they submitted “asfotase alfa, an investigational, first-in-class enzyme replacement therapy for the treatment of hypophosphatasia (HPP)” for a Biogenics License Application to the FDA. CEO Leonard Bell noted, “Completion of the rolling BLA is another step forward in our goal to bring this highly innovative potential treatment to patients with HPP who currently have no approved treatment options. Our goal in all territories is to continue to work with regulatory authorities to obtain marketing authorizations for asfotase alfa and to bring this important therapy to patients with HPP as quickly as possible.”
On January 5th, analyst Ian Somaiya of Nomura Securities downgraded Alexion Pharmaceuticals from Buy to Neutral and lowered his price target from $224 to $223. Somaiya noted, “Our downgrade is based on valuation as shares have approached our TP… While we believe Alexion’s unique business model provides increased patient loyalty, the business model comes with higher-than-typical administrative/marketing cost.” The analyst compared his analysis to that of The Street, noting “despite having revenue estimates that are slightly higher than the Street’s, our above-consensus spending estimates result in increasing divergence with Street earnings estimates starting in 2016 (Nomura: $7.05 vs. Street $7.38).” He referred to two drugs in Alexion’s pipeline, noting “We look to get more constructive on shares following confirmation of strong Asfotase alfa launch and as visibility on line extensions to Soliris (both in 2H15) confirm our view that the company offers one of the most sustainable franchises in biotech.”
Ian Somaiya has rated ALXN 4 times since June 2010, with a 100% success rate recommending the stock and an average return of +43% per ALXN recommendation.
Somaiya often rates stocks in the pharmaceutical industry, such as Gilead Sciences (NASDAQ: GILD) and Celgene (NASDAQ:CELG). Somaiya has rated Gilead 9 times with a 67% success rate recommending the stock and a +11.3% average return per GILD recommendation. The analyst has rated Celgene 6 times since May 2009 when shares were just shy of $20, and shares were $103.24 in October when he last reiterated a Buy rating. Thanks to Somaiya’s timely recommendations, he has a 42.1% average return per CELG recommendation.
Overall, Ian Somaiya has a 69% overall success rate recommending stocks with a +20.8% average return per recommendation.