On Friday, Morgan Stanley (NYSE:MS) made a significant adjustment to its outlook on Immunocore Holdings (NASDAQ: IMCR), downgrading the stock from Overweight to Equalweight. Alongside this change in rating, the firm also lowered the price target to $35.00, a substantial decrease from the previous target of $74.00.
The stock, currently trading at $30.31, has fallen nearly 56% year-to-date and is trading near its 52-week low. According to InvestingPro data, the company maintains a strong financial position with a current ratio of 3.78, indicating robust liquidity. The adjustment follows a reassessment of the company's drug launch timelines and pricing expectations.
The revision by Morgan Stanley was influenced by less than favorable data outcomes for Immunocore's bretantafusp, particularly in its trials for cutaneous melanoma and ovarian cancer earlier in the year. Despite these setbacks, the company has maintained strong revenue growth of 25% over the last twelve months, reaching $296 million.
Due to these results, the analyst has moderated projections for the drug's market performance. While acknowledging the potential interest in upcoming data for IMC-M113V in HIV in the first quarter of 2025, the analyst also noted the company's prior intentions to seek partnership for further development of the program.
Morgan Stanley's analysis suggests that the current market valuation of Immunocore Holdings now accurately reflects the anticipated performance of bretantafusp. The firm indicates that there seems to be limited potential for stock price growth from further updates on the drug as the company explores its use in metastatic NSCLC and its combination in earlier line NSCLC treatment.
The firm's outlook on Immunocore's lead product, Kimmtrak, remains positive, with full credit still being given for the drug's prospects. However, this optimism is tempered by the recalibrated expectations for other products in the pipeline, leading to the decision to move the stock to an Equalweight rating.
In summary, Morgan Stanley's updated position on Immunocore Holdings reflects a cautious stance on the company's near-term growth potential, driven by the recent clinical data and market dynamics. With a market capitalization of $1.52 billion, InvestingPro analysis suggests the stock may be undervalued at current levels, despite near-term challenges.
The new price target and rating are now aligned with the firm's current view of the company's valuation and future prospects. For deeper insights into IMCR's valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Immunocore Holdings has seen significant developments in its financial and clinical operations. The company has fully prepaid a $52 million loan under its agreement with Pharmakon Advisors, terminating the agreement ahead of its 2028 maturity date. This decision releases Immunocore from future financial commitments under the loan terms.
Mizuho (NYSE:MFG) Securities adjusted its stance on Immunocore, downgrading the stock to a Neutral rating from its previous Outperform status and slashing the 12-month price target to $38.00 from $72.00. This follows Immunocore's third-quarter financial update and is attributed to reduced confidence in the company's drug candidate, brenetafusp.
UBS initiated coverage on Immunocore with a Sell rating due to a perceived lack of near-term growth drivers and potential competition for the company's uveal melanoma treatment, Kimmtrak. However, H.C. Wainwright maintained its Buy rating on Immunocore, based on the potential of IMC-M113V, a novel bispecific antibody for HIV treatment, with new data from the trial expected in the first quarter of 2025.
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