On Friday, H.C. Wainwright adjusted its price target on shares of Legend Biotech Corp. (NASDAQ:LEGN), a global biotech company, to $73.00 from the previous $86.00. Despite this reduction, the firm maintains a Buy rating on the stock.
The change comes after Legend Biotech reported a slowdown in revenue growth, which the company attributes to the timing of order billing and the necessary comparability runs for transferring manufacturing processes to new facilities.
In response to the recent stagnation in revenue growth, H.C. Wainwright has revised its revenue estimates for Legend Biotech's CARVYKTI, a therapeutic product. For the full year of 2024, the revenue estimate has been adjusted to $850 million, with Legend's portion expected to be $425 million.
The forecast for 2025 has been set at $1.8 billion in total revenue, with Legend anticipated to report $920 million. The peak sales estimate for CARVYKTI in the U.S. remains at $5.9 billion by 2037, which would correspond to treatment for approximately 8,200 patients across all lines of therapy.
The recent quarters have seen multiple instances of stagnation in the growth of CARVYKTI's revenue. As a result, H.C. Wainwright has increased the discount rate applied to Legend Biotech's stock from 10% to 11%. This adjustment has contributed to the lowered 12-month price target of $73, which still suggests a significant 85% upside potential from the stock's current trading level.
The revised valuation reflects the near-term challenges faced by Legend Biotech in its revenue generation. However, the firm's continued endorsement with a Buy rating indicates confidence in the long-term potential of the company's product, CARVYKTI. The analyst has reiterated this positive outlook despite the recent financial adjustments.
InvestingPro Insights
As Legend Biotech Corp. (NASDAQ:LEGN) navigates through its current financial landscape, insights from InvestingPro provide a deeper perspective on the company's market position and future potential. According to InvestingPro, Legend Biotech holds more cash than debt on its balance sheet, which is a strong indicator of financial stability. Moreover, analysts are optimistic about the company's sales growth in the current year, which aligns with H.C. Wainwright's expectations for revenue from CARVYKTI.
InvestingPro Data reveals a market capitalization of $7.2 billion USD for Legend Biotech, with significant revenue growth of 206.05% over the last twelve months as of Q1 2024. Despite the company's impressive revenue surge, it is important to note that analysts do not anticipate Legend Biotech will be profitable this year, and the company has reported weak gross profit margins of -63.84% in the same period. Furthermore, the stock is trading at a high Price / Book multiple of 6.19, which suggests that it may be valued richly relative to its book value.
For investors seeking additional insights and a comprehensive analysis, there are 12 more InvestingPro Tips available for Legend Biotech, which can be accessed at https://www.investing.com/pro/LEGN. Interested parties can also take advantage of an exclusive offer using the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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