Incyte Reports Strong Jakafi Sales, But Recent Rally Sparks Downgrades


Incyte (INCY) has reported 1Q20 EPS that included a 22% year-over-year rise in blood cancer drug Jakafi to $460 million, above consensus of $447 million.

Meanwhile Q1 Non-GAAP EPS of -$2.86 missed Street expectations by $2.50 while GAAP EPS of -$3.33 also fell short by $2.08. However, excluding inclusion of $805 mln expense related to tafasitamab partnership, the P&L was in line. Revenue of $568.51M beat Street forecasts by $15.27M and represented 14.2% year-over-year growth.

Following the results, JPMorgan analyst Cory Kasimov downgraded Incyte from buy to hold. However, he ramped up his price target to $99- in-line with the stock’s current share price of $98.82- from $89 previously.

“We see long-term value in the company primarily driven by the Jak inhibitor, Jakafi, as well as an increasingly broad new product pipeline with late stage shots on goal (notably tafasitamab and topical ruxolitinib)” says Kasimov.

“However, we reassessed our model and pulled on a number of upside levers and have a hard time justifying substantial upside at the current valuation—the basis of our N rating” he explains. INCY stock is currently trading up 33% on a three-month basis- boosted by news of Jakafi’s testing for Covid-19 related CRS, though according to the Street this would be an unlikely long-term growth driver.

Indeed, Morgan Stanley’s Vikram Purohit also recently downgraded Incyte from buy to hold citing the stock’s elevated valuation, while boosting his price target from $90 to $94.

The analyst comments “Following a ~35% increase in INCY over recent weeks, we believe current levels imply appropriate value for the base business and the late-stage pipeline, and we move to Equalweight.”

Overall Incyte shows a cautiously optimistic Moderate Buy consensus from the Street, with analysts split between hold and buy ratings. But thanks to the stock’s rally, the $96 average analyst price target indicates 3% downside potential from current levels. (See Incyte stock analysis on TipRanks)

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