On Friday, Piper Sandler adjusted its stance on Halozyme (NASDAQ:HALO) Therapeutics (NASDAQ:HALO), downgrading the stock from Overweight to Neutral while simultaneously raising the price target to $51 from the former target of $48. The adjustment follows the recent developments including the issuance of a new patent for the company and the increase in the EU Darzalex royalty rate, which will return to its full mid-single digit percentage through March 2029.
The firm's decision to alter the rating is based on the performance of Halozyme's shares, which have reached the updated price target even after accounting for the latest positive updates. Piper Sandler's approach to evaluating Halozyme has consistently been driven by their financial modeling. This method was previously applied during the May 2023 upgrade and the May 2021 downgrade of the company's stock.
The analyst acknowledged that while the updates were favorable, the current estimates for Halozyme's ENHANZE business are believed to be reflective of the near-term outlook. Looking ahead, Piper Sandler suggested that significant revisions to their model could occur based on the progression of Halozyme's wave 3 products. However, they anticipate that these products will not become meaningful contributors until 2025.
In their commentary, Piper Sandler stated, "Our outlook for HALO has always been dictated by our model (this was the case for our May 2023 upgrade and previously for our May 2021 downgrade), and we think our current estimates largely reflect the near-term outlook for the ENHANZE business." The firm also expressed that while there is potential for future model adjustments related to the wave 3 products, such changes are expected to be more relevant to the company's story in a couple of years.
In other recent news, Halozyme Therapeutics has secured a new European patent for its ENHANZE® drug delivery technology, extending the company's intellectual property rights until March 2029. The patent is expected to maintain the original royalty rate for DARZALEX SC, a treatment for multiple myeloma, in Europe until its expiration. In other developments, the U.S. Food and Drug Administration has set a new review date for Halozyme's Biologics License Application of a subcutaneous formulation of Opdivo, co-formulated with ENHANZE® technology. The new goal date is set for December 29, 2024.
On the financial front, Halozyme reported strong Q1 results, with a 15% year-over-year royalty growth for the 15th consecutive quarter. The company anticipates a 10-19% increase in total revenue for the year, projecting amounts between $915 million and $985 million. EBITDA is expected to grow by 26-37%, reaching $535 million to $585 million, while non-GAAP EPS growth is forecasted at 28-41%, resulting in $3.55 to $3.90 per share. Furthermore, Halozyme announced a new $750 million share repurchase program.
InvestingPro Insights
As Halozyme Therapeutics (NASDAQ:HALO) navigates the market following Piper Sandler's recent rating adjustment, the real-time data from InvestingPro paints a broader picture of the company's financial health. With a robust market capitalization of $6.55 billion and a P/E ratio of 21.22, Halozyme stands out as a company with substantial value. The adjusted P/E ratio for the last twelve months as of Q1 2024 is slightly higher at 21.67, indicating a stable earnings outlook.
InvestingPro Tips highlight that management's aggressive share buybacks could be a signal of confidence in the company's future, while four analysts have revised their earnings upwards for the upcoming period, suggesting a positive sentiment around Halozyme's financial prospects. Additionally, the company's strong performance is reflected in the significant returns over the past week, month, and three months, with price total returns of 16.14%, 24.82%, and 23.33%, respectively.
For readers looking to delve deeper into Halozyme Therapeutics' potential, InvestingPro offers additional insights with more InvestingPro Tips available. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription to access this valuable information.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.