On Thursday, Mizuho Securities adjusted its outlook on Sage (LON:SGE) Therapeutics (NASDAQ:SAGE) shares, a biopharmaceutical company, by reducing the price target to $12 from the previous $13 while maintaining a Neutral rating on the stock. The adjustment follows Sage's mixed second-quarter results, which included both encouraging and concerning developments.
The company's product, Zurzuvae, saw sales modestly surpassing the consensus, with a significant 67% quarter-over-quarter increase in written prescriptions. Additionally, Sage achieved considerable expansion in commercial and Medicaid coverage, which was viewed positively.
However, the sales figures for Zurzuvae fell short of Mizuho's expectations, a discrepancy attributed to wholesaler destocking and the provision of free drugs. The potential for further destocking was also noted as a concern.
Furthermore, Sage announced plans to expand the Zurzuvae sales force in the fourth quarter of 2024 to foster growth in 2025, which will proceed without the support of Biogen (NASDAQ:BIIB). This development raises questions about the strength of Sage's partnership with Biogen.
In light of these factors, Mizuho has revised its forecast for Zurzuvae collaboration revenues in 2024, lowering the figure from $39 million to $33 million.
While the firm's stance on Zurzuvae is more constructive due to the strong prescription growth, it maintains a cautious approach to adjusting sales forecasts upward.
The firm states that it requires better visibility on the drug's potential adoption before forecasting beyond the already anticipated peak sales of over $300 million.
The revised price target of $12 reflects concerns over increased spending by Sage, as the company invests in its sales force expansion to drive future growth.
In other recent news, Sage Therapeutics, a biopharmaceutical company, has been the subject of multiple financial firm adjustments. Mizuho Securities reduced the price target for Sage Therapeutics to $12 from $13, maintaining a Neutral rating, following the company's mixed second-quarter results. Stifel also adjusted its outlook on Sage Therapeutics, revising the stock's price target downward to $15 from $20, while retaining a Hold rating.
The adjustments come as Sage Therapeutics' product, Zurzuvae, modestly surpassed consensus sales, with a significant quarter-over-quarter increase in written prescriptions.
However, sales figures for Zurzuvae fell short of Mizuho's expectations, attributed to wholesaler destocking and the provision of free drugs. This led Mizuho to revise its forecast for Zurzuvae collaboration revenues in 2024, lowering the figure from $39 million to $33 million.
In addition to these developments, Sage announced plans to expand the Zurzuvae sales force in the fourth quarter of 2024 to foster growth in 2025. This expansion will proceed without the support of Biogen, raising questions about the strength of Sage's partnership with Biogen.
Despite these recent developments, Sage Therapeutics remains committed to its ongoing projects and the expansion of its sales force to meet growing demand for Zurzuvae.
InvestingPro Insights
As Mizuho Securities revises its stance on Sage Therapeutics, real-time data and insights from InvestingPro provide a broader perspective on the company's financial health and market performance. Sage Therapeutics currently holds a market capitalization of approximately $659 million, with a notably high revenue growth over the last twelve months at 868.96%. Despite this surge in revenue, analysts have expressed concerns, as reflected in the three recent downward revisions for the company's upcoming earnings.
InvestingPro Tips highlight that while Sage has more cash than debt on its balance sheet, which is a positive sign for financial stability, it is quickly burning through cash, raising questions about long-term sustainability. Additionally, the company's stock price has experienced a significant decline over the past year, with a 69.58% drop in the 1-year price total return. Analysts also anticipate a sales decline in the current year and do not expect the company to be profitable this year.
The company's gross profit margins are weak, which could be a contributing factor to the concerns raised by Mizuho Securities regarding increased spending. It's also worth noting that Sage Therapeutics does not pay a dividend, which might influence investment decisions for those seeking income-generating stocks. For those considering a deeper dive into Sage's financials and future prospects, InvestingPro offers additional insights and tips, with a total of 11 listed tips for Sage Therapeutics, available at: https://www.investing.com/pro/SAGE
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.