On Monday, UBS upgraded shares of Eisai Co (OTC:ESAIY) Ltd (4523:JP) (OTC: ESALY) from Neutral to Buy, with a new price target set at ¥7,500, an increase from the previous ¥6,900. The upgrade follows a reassessment of Eisai's financial projections and the expected growth in sales of its Alzheimer's drug, Leqembi.
The firm raised its earnings per share (EPS) forecasts for Eisai for fiscal years ending March 2025, 2026, and 2027 by 16%, 15%, and 35%, respectively. This optimistic outlook is based on the anticipation that sales of Leqembi will surge in the second half of 2024.
Eisai has reported global sales of Leqembi totaling ¥2.8 billion in the fourth quarter of FY3/24 and ¥6.3 billion in the first quarter of FY3/25. These figures indicate a gradual increase in sales. Although Eisai's target for global Leqembi sales is an ambitious ¥56.5 billion for FY3/25, UBS forecasts sales to reach ¥59 billion, exceeding the company's goal. This projection has been revised upwards from an earlier estimate of ¥30.6 billion.
The firm acknowledges the significant unmet medical needs of Alzheimer's patients and considers Eisai's projection of peak sales of ¥1.3 trillion for Leqembi to be bullish in the current market environment.
However, the treatment's market penetration rate could improve with advancements such as subcutaneous injections and the ability to make definitive diagnoses using blood biomarkers.
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