On Friday, BofA Securities adjusted its stance on H Lundbeck A/S (HLUNB:DC) (OTC: HLUYY) stock, shifting from a Neutral to an Underperform rating. The investment firm maintained its price target for the Danish pharmaceutical company at DKK46.00.
The downgrade follows a significant recovery in Lundbeck's share price, which has seen an approximate 50% increase from multi-year lows. This rebound is attributed to the company's effective commercial strategies for Rexulti and Vyepti, including Rexulti's successful launch for treating agitation in Alzheimer's patients and Vyepti's revamped U.S. strategy coupled with its global market expansion.
Additionally, developments in Lundbeck's early-stage pipeline have contributed to the stock's recent performance, as noted during the R&D investor day on November 30, 2023.
Despite these positive developments, BofA Securities believes that with a mere 3% downside to its price objective, Lundbeck now presents one of the lowest expected share price returns within the firm's coverage universe. This outlook has prompted the change in rating.
Looking ahead, near-term share price movements for Lundbeck are expected to hinge on the continued success of Rexulti and Vyepti, as well as the potential launch of a treatment for PTSD slated for February 25. The firm also points to the importance of Lundbeck's patent portfolio, particularly noting the patent expirations for Rexulti in 2029 and for Trintellix outside the United States beginning in 2028.
In other recent news, H Lundbeck A/S has been experiencing a surge in sales driven by Vyepti and Rexulti, according to Deutsche Bank (ETR:DBKGn). The bank recently maintained its Buy rating for Lundbeck and raised the price target based on the company's second-quarter results, which surpassed expectations and led to an upgraded guidance. The successful commercial trajectories of Vyepti and Rexulti are predicted to offset potential sales decline from older brands in the future.
Deutsche Bank has consistently shown confidence in Lundbeck, initially upgrading the company to a Buy rating in February 2024, based on the strong performance of Vyepti and Rexulti. Recent data, including prescription projections for AADAD/Rexulti, suggest that Lundbeck's commercial story is solid and potentially improving.
Furthermore, Lundbeck has made significant progress in developing a treatment for PTSD, a venture once considered high-risk with low expectations. The company has reached a stage of acceptance with a filing, which led Deutsche Bank to reiterate its Buy rating in May 2024.
With a February PDUFA date set, Lundbeck may be on the verge of another surprise approval, similar to its success with AADAD. These are some of the recent developments in the company.
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