On Monday (NASDAQ:MNDY), Mizuho (NYSE:MFG) Securities adjusted its stance on Immunocore Holdings (NASDAQ:IMCR), moving the stock to a Neutral rating from its previous Outperform status. The firm also slashed the 12-month price target to $38.00, a significant decrease from the earlier $72.00 target. The revision follows Immunocore's third-quarter financial update released last week.
The downgrade is attributed to reduced confidence in the company's drug candidate, brenetafusp, which is aimed at treating PRAME-targeted cancers. Mizuho's reassessment of brenetafusp's prospects in melanoma remains unchanged, but the firm has lowered the probability of success and peak market share expectations for the drug's use in ovarian cancer and non-small cell lung cancer (NSCLC).
Additionally, a delay in the anticipated fourth-quarter readout for NSCLC has influenced the decision.
Mizuho's revised forecast now estimates peak risk-unadjusted and adjusted sales for brenetafusp at approximately $5.4 billion and $939 million, respectively. This represents a roughly 40-45% cut from the previous projections of $9.3 billion and $1.7 billion.
The firm noted that the slowdown in year-over-year growth for Kimmtrak, another of Immunocore's products, along with limited visibility on potential news flow that could positively impact stock performance over the coming year, were key factors in their decision to downgrade the stock.
The firm expressed a cautious outlook for Immunocore's shares, citing the need for more concrete developments that could drive outperformance in the market. With the near-term potential for significant positive news seeming limited, Mizuho has chosen to adopt a more neutral position on Immunocore Holdings.
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.
Meanwhile, UBS has 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. Despite this, Immunocore reported a 34% increase in net sales of Kimmtrak, reaching $146 million in the first half of the year, supplemented by a 7% increase in Q2 revenues.
In other updates, Immunocore is currently conducting the STRIVE trial to assess the safety and tolerability of IMC-M113V, a novel bispecific antibody for HIV treatment. H.C. Wainwright maintains its Buy rating, based on the potential of IMC-M113V, with new data from the trial expected in the first quarter of 2025.
InvestingPro Insights
Immunocore Holdings' recent downgrade by Mizuho Securities aligns with some of the financial metrics and insights provided by InvestingPro. The company's market cap stands at $1.74 billion, reflecting the market's current valuation amid the revised outlook for its drug candidates.
InvestingPro data shows that Immunocore's revenue growth remains strong at 25.09% over the last twelve months, with Q3 2024 showing a 23.74% quarterly increase. This growth is encouraging, but it's important to note that the company is not yet profitable, with a negative operating income of $68.96 million in the same period.
Two relevant InvestingPro Tips highlight that Immunocore "holds more cash than debt on its balance sheet" and "liquid assets exceed short term obligations." These factors could provide some financial stability as the company navigates the challenges highlighted in Mizuho's downgrade.
The stock has shown a significant return over the last week, with a 11.29% price increase, possibly reflecting market reactions to recent news and analyst adjustments. However, the year-to-date return remains negative at -49.22%, underscoring the volatility and challenges faced by the company.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Immunocore's financial health and market position.
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