RBC Capital has maintained its Sector Perform rating on shares of Neurocrine (NASDAQ:NBIX) Biosciences (NASDAQ: NBIX), with a steady price target of $133.00.
The firm addressed the recent performance issues of Neurocrine's stock, attributing the downward pressure to a combination of disappointing phase II schizophrenia trial results for drug candidate '568 and a dip in prescription trends for Ingrezza, the company's primary revenue driver.
According to RBC Capital, despite the challenges, they anticipate that Ingrezza will continue to experience solid long-term growth and are confident that Neurocrine will meet its sales guidance for 2024.
However, RBC Capital's prescription analysis indicates that Ingrezza may be facing increased competition from Austedo, which could affect its market share for VMAT2 inhibitors. This competitive landscape suggests that Neurocrine's increased commercial investment will be necessary not only for stimulating market growth but also for defending its position in the market.
In other recent news, Neurocrine Biosciences reported sustained improvements in the treatment of Huntington's disease chorea with INGREZZA capsules, according to interim results from the KINECT-HD2 study.
These findings were consistent through Week 104, regardless of patients' concurrent antipsychotic medication. Concurrently, the company reported over 30% year-over-year growth in sales of INGREZZA, leading to an increase in their sales guidance for the year to a range of $2.25 billion to $2.3 billion.
However, Neurocrine Biosciences also announced the discontinuation of luvadaxistat's development for schizophrenia-related cognitive impairment after the compound failed to meet the primary endpoint in the ERUDITE Phase 2 clinical study.
Following this, the company decided to focus on advancing other candidates in its pipeline, specifically NBI-1117568 for schizophrenia and NBI-1065845 for major depressive disorder, into Phase 3 clinical development.
On the analyst front, Mizuho maintained a Neutral rating on Neurocrine Biosciences, while Piper Sandler upgraded the company's stock from Neutral to Overweight, expressing confidence in the company's investigational drug NBI-1117568.
BMO Capital Markets maintained a Market Perform rating for Neurocrine, and H.C. Wainwright reaffirmed its Buy rating for the company, following a dose-finding study for NBI-1117568, which indicated a statistically significant improvement.
InvestingPro Insights
To complement RBC Capital's analysis, recent data from InvestingPro offers additional perspective on Neurocrine Biosciences' financial health and market position. Despite the challenges highlighted in the article, the company's fundamentals show some positive signs.
InvestingPro data reveals that Neurocrine's revenue grew by 26.69% over the last twelve months as of Q2 2024, with an even stronger quarterly revenue growth of 30.37% in Q2 2024. This robust top-line growth aligns with RBC Capital's expectation of solid long-term growth for Ingrezza.
Furthermore, InvestingPro Tips indicate that Neurocrine is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.37. This suggests that the stock might be undervalued, supporting RBC Capital's observation that the stock price has fallen below their estimated fair value.
Another InvestingPro Tip notes that the company's RSI suggests the stock is in oversold territory, which could present a potential opportunity for investors considering RBC Capital's maintained price target of $133.00.
For readers interested in a deeper dive into Neurocrine's financial health and market prospects, InvestingPro offers 11 additional tips, providing a comprehensive analysis to inform investment decisions.
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