On Tuesday, Oppenheimer sustained its positive stance on Neurocrine (NASDAQ:NBIX) Biosciences (NASDAQ: NBIX), maintaining an Outperform rating and a $192.00 price target. The firm's optimism is anchored in the anticipation of the company's third-quarter update, scheduled for October 30, 2024. The analyst highlighted that the market might be undervaluing Neurocrine's growth prospects and its ability to generate cash flow, despite the recent setback from phase 2 trial results of its M4 agonist, NBI-568, aimed at treating schizophrenia.
The analyst's confidence is bolstered by several factors expected to be addressed in the upcoming quarterly update. These include the growth potential for Ingrezza, Neurocrine's treatment for tardive dyskinesia (TD) and Huntington's disease (HD), which is likely to be propelled by the introduction of a new sprinkle formulation. Additionally, the continued development of '845, with its potential to be a leading AMPA PAM for major depressive disorder (MDD), is seen as a positive development.
Further optimism is drawn from the anticipated update on crinecerfont, which has been granted priority review for both pediatric and adult use, with Prescription Drug User Fee Act (PDUFA) dates set for December 29 and 30, 2024, respectively. These milestones could significantly impact the company's trajectory moving forward.
The analyst also pointed to the upcoming commentary on the progress of the pipeline, including the next steps for '568, as a moment to watch. The firm expects that additional insights into the company's business development, a core strength and competitive edge for Neurocrine, will be shared during the third-quarter update.
The investment firm's maintained rating and price target reflect a belief in Neurocrine Biosciences' strategic positioning and its portfolio's potential to drive future growth, despite recent challenges in its clinical trials.
In other recent news, Neurocrine Biosciences recorded over 30% year-over-year growth in sales of their drug, INGREZZA, leading to an increase in their sales guidance for the year to a range of $2.25 billion to $2.3 billion. The company also announced the appointment of Kyle Gano, Ph.D., as President and CEO, with a revised compensation package. However, the development of its drug luvadaxistat was halted due to inconsistent results in the ERUDITE Phase 2 clinical study.
On the analyst front, Piper Sandler maintained an Overweight rating on Neurocrine Biosciences, indicating confidence in the potential of Neurocrine's drug crinecerfont for treating congenital adrenal hyperplasia (CAH). Raymond James also resumed coverage with an Outperform rating and set a price target of $155, suggesting confidence in the company's prospects, particularly for its product Ingrezza and the potential in the CAH market.
RBC Capital maintained its Sector Perform rating on Neurocrine Biosciences shares, attributing the stock's recent performance to a combination of disappointing phase II schizophrenia trial results for drug candidate '568 and a dip in prescription trends for Ingrezza. Meanwhile, Mizuho maintained a Neutral rating on Neurocrine Biosciences, while BMO Capital Markets maintained a Market Perform rating, following the discontinuation of luvadaxistat's development.
InvestingPro Insights
Neurocrine Biosciences' financial metrics and growth prospects align well with Oppenheimer's optimistic outlook. According to InvestingPro data, the company's revenue growth is robust, with a 26.69% increase over the last twelve months and an even stronger 30.37% growth in the most recent quarter. This growth trajectory supports the analyst's positive view on Ingrezza's potential and the company's overall pipeline.
InvestingPro Tips highlight that Neurocrine is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.39. This suggests that the market may indeed be undervaluing the company's growth prospects, as noted by the Oppenheimer analyst. Additionally, the company's strong financial health is evident from its ability to cover interest payments with cash flows and maintain liquid assets exceeding short-term obligations.
While the current P/E ratio of 34.17 might seem high, the adjusted P/E for the last twelve months is a more modest 24.6, indicating potential value for investors. The company's profitability and high return over the last decade further reinforce Oppenheimer's confidence in Neurocrine's cash flow generation capabilities.
For investors seeking more comprehensive analysis, InvestingPro offers 10 additional tips for Neurocrine Biosciences, providing a deeper understanding of the company's financial position and market potential.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.