On Friday, Citi reaffirmed its confidence in Legend Biotech Corp (NASDAQ:LEGN), stock maintaining a Buy rating and a $95.00 price target on the company's shares.
The endorsement follows a recent update call with the biotechnology firm's management, who confirmed expectations for a sales increase in the second half of 2024.
This anticipated growth is attributed to the company's on-track capacity expansion and the upcoming launch of treatments in the second to fourth lines (2-4L).
Legend Biotech is on course to double its production capacity in 2024 compared to 2023, with a goal of reaching an annual production rate of 10,000 doses by the end of 2025.
The company's management cited the occupation of manufacturing slots for validation runs as the cause of slower sales growth in the first half of 2024, but they remain optimistic about the growth potential in the latter half of the year.
The firm's Carvykti™ treatment is particularly highlighted as a driving force for the expected rebound in sales. The company is also progressing with its CARTITUDE-5 patient enrollment, which is projected to be completed in the first half of 2024, with preliminary data anticipated in 2026.
Additionally, discussions with the FDA regarding the use of minimal residual disease negativity (MRDn) as a surrogate endpoint for CARTITUDE-6 are underway.
Further updates on CARTITUDE-2 Cohort E/F are likely to be presented at the American Society of Hematology (ASH) meeting in 2024.
The current stock price of Legend Biotech has been perceived as weak due to the slower sales growth in the earlier part of the year.
However, Citi's analysis suggests that the company's strategic initiatives and upcoming product launches could catalyze a recovery in the stock's performance. The firm's rating remains unchanged, reflecting a Buy/High Risk investment stance with a price target of $95.00.
InvestingPro Insights
Amidst the positive outlook from Citi on Legend Biotech Corp (NASDAQ:LEGN), recent data from InvestingPro shows a mixed financial landscape. With a market capitalization of approximately $7.9 billion USD, Legend Biotech holds a unique position in the biotech industry. Notably, the company maintains a solid balance sheet, with cash reserves exceeding its debt, which is a positive sign for investors considering the volatility inherent in the biotech sector. This is complemented by the fact that Legend Biotech's liquid assets surpass its short-term obligations, indicating a degree of financial stability.
However, the company's financial metrics also reveal challenges. Legend Biotech's gross profit margin for the last twelve months as of Q1 2024 stands at a concerning -63.84%, reflecting its current lack of profitability. Moreover, the firm is trading at a high Price / Book multiple of 6.79, which may suggest a premium valuation compared to its tangible assets.
In terms of performance, five analysts have revised their earnings upwards for the upcoming period, which could signal a turning point for the company if these forecasts materialize. Yet, analysts remain cautious about the company's profitability in the short term.
For those intrigued by Legend Biotech's potential and interested in deeper analysis, InvestingPro offers additional insights and metrics. Subscribers can access more InvestingPro Tips for a comprehensive understanding of LEGN's financial health and future prospects. To enhance your investment research, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 9 additional InvestingPro Tips available for Legend Biotech, which can further inform investment decisions.
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