On Friday, Kalvista Pharmaceuticals Inc (NASDAQ:KALV) shares experienced a revision in its price target by H.C. Wainwright to $20.00, a decrease from the previous target of $24.00. Despite this change, the firm maintains a Buy rating on the stock.
The adjustment comes as the analyst recalibrates expectations following the removal of Factor XIIa from their financial model. This reevaluation is in anticipation of the upcoming New Drug Application (NDA) submission for sebetralstat. The new price target of $20.00 is derived from a blend of two valuation methods.
Firstly, a per-share value of $26.70 is calculated using a 25-times multiple of the projected taxed and diluted earnings per share (EPS) for the year 2034, which is then discounted back to the present year at a rate of 13%.
Secondly, a net present value (NPV) discounted cash flow analysis contributes $14.12 per share, employing the same 13% discount rate and a growth rate of 1%.
These valuation methods are aligned with the expected price-to-earnings (P/E) multiple and discount rates typical for a developmental stage biopharmaceutical company. The firm's analysis factors in the potential of Kalvista's pipeline and the anticipated performance of its developmental candidates.
The investment thesis and target price are not without their risks. The firm highlights that there are potential challenges ahead for Kalvista Pharmaceuticals. These include the possibility that the company's developmental candidates may not receive approval or might not meet revenue expectations due to variables such as market size, penetration rates, and pricing strategies.
Additionally, there is the risk associated with securing sufficient capital to fund ongoing operations and the continued development and commercialization of their programs.
InvestingPro Insights
Amidst the recent price target revision for Kalvista Pharmaceuticals Inc (NASDAQ:KALV), InvestingPro data and tips provide a detailed perspective on the company's financial health and market performance. With a market capitalization of $513.43 million and a notable 12.89% return over the last week, the company's stock shows signs of active investor interest. Despite this, Kalvista's challenges are reflected in its negative P/E ratio of -3.82, indicating that it is not currently profitable.
Two InvestingPro Tips highlight key financial aspects: Kalvista holds more cash than debt on its balance sheet, which is a positive sign of liquidity; however, the company is rapidly burning through its cash reserves. Additionally, analysts are revising their earnings expectations downwards for the upcoming period, which investors should consider when evaluating the company's future prospects. For those interested in a deeper analysis, more InvestingPro Tips are available, providing further insights into the company's financials and market performance.
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