On Monday, Deutsche Bank (ETR:DBKGn) adjusted its price target on Galapagos NV (NASDAQ:GLPG:NA) (NASDAQ: GLPG), reducing it to €28 from the previous €30, while continuing to recommend a Hold rating on the stock. The revision follows a slight downturn in the company's stock price after the release of its third-quarter results.
According to the analyst, the revenue shortfall, deemed insignificant due to the small size and nature of the missed revenue, coupled with the absence of immediate catalysts, prompted the market's reaction.
The analyst noted the third-quarter results did not present new information regarding upcoming catalysts, which had been previously outlined. The expectation set by Deutsche Bank was for a more eventful second half of 2025, particularly looking forward to the TYK2 readouts.
The current hold status and the new price target reflect a modest 7% decrease from the former target, acknowledging the time frame until potential catalysts emerge and the inherent risks associated with clinical development.
Galapagos NV's stock experienced a minor dip following the third-quarter results, which the analyst suggests was anticipated, given the company's position ahead of significant developments expected later in 2025. The focus for the upcoming months is projected to be on data updates from the American Society of Hematology (ASH) 2024 and the buildup to the second half of 2025's catalysts.
The analyst's comments indicate that while updates and anticipation for the latter half of 2025's catalysts may keep the company in view, they are not expected to significantly influence the stock's movement in the near term. With clinical development risks and several months until the next major company developments, the Hold rating and adjusted price target are maintained.
Despite the price target reduction, the Hold rating suggests that Deutsche Bank does not see significant downside or upside to Galapagos NV's stock at this time, advising investors to maintain their positions as the company approaches a potentially more dynamic period in the second half of 2025.
In other recent news, Galapagos NV reported solid third-quarter financial results, maintaining a strong cash position of EUR 3.3 billion and projecting a cash burn guidance of EUR 370-410 million for the year. The company has made significant advancements in its oncology and immunology programs, including the preparation for multiple Investigational New Drug (IND) applications. FDA IND clearance was received for GLPG5101, with patient recruitment for the Phase II ATALANTA study in non-Hodgkin lymphoma set to begin by year-end.
Other recent developments include strategic collaborations with Blood Centers of America and Adaptimmune, which are key to expanding the cell therapy manufacturing network. Galapagos is also advancing over 15 programs, targeting at least four IND-enabling studies in 2025. The company plans to submit an IND for GLPG5201 in early 2025 and is advancing a next-generation bispecific CAR-T candidate into IND-enabling studies.
Despite facing a crowded market for CAR-T therapies in autoimmune diseases, Galapagos remains confident in the strength of its CAR-T data and potential for expedited market entry. The TYK2 inhibitor program is progressing well, with Phase II studies in dermatomyositis and lupus, and data expected by 2025-2026.
InvestingPro Insights
Recent InvestingPro data provides additional context to Deutsche Bank's analysis of Galapagos NV. The company's market capitalization stands at $1.78 billion, with a price-to-book ratio of 0.57, suggesting the stock may be undervalued relative to its assets. This aligns with the Hold rating from Deutsche Bank, as there could be potential for value realization.
InvestingPro Tips highlight that Galapagos holds more cash than debt on its balance sheet and has liquid assets exceeding short-term obligations. These factors contribute to the company's financial stability as it navigates through the period leading up to the anticipated catalysts in late 2025.
However, investors should note that Galapagos is currently not profitable, with a negative adjusted P/E ratio of -33.46. The company's revenue has also seen a significant decline, with a 52.19% decrease over the last twelve months. These metrics underscore the importance of the upcoming clinical developments and potential catalysts mentioned in Deutsche Bank's analysis.
For a more comprehensive analysis, InvestingPro offers 8 additional tips for Galapagos NV, providing investors with a deeper understanding of the company's financial position and prospects.
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