Wall Street Trader schreef op 28 maart 2024 16:04:
BofA Securities Galapagos
(Underperform) PT $ 31
BofA cuts Galapagos rating, sees stock as value trapOn Thursday, BofA Securities adjusted its stance on Galapagos NV (NASDAQ:GLPG), downgrading the biotech firm from Neutral to Underperform.
The analyst also revised the price target to $31.00 from the previous $41.00. The decision reflects concerns about the company's current valuation and future prospects.
Galapagos, a biotechnology company focused on developing treatments in oncology and immunologic disorders, has been struggling with its enterprise value, which has been negative for over two years, ranging between $1.5 billion and $2 billion. This stagnant valuation has raised alarms about the company's growth trajectory and its ability to create shareholder value.
"A pre-commercial stage biotech developing therapies for oncology and immunologic disorders, GLPG’s enterprise value has remained stuck at negative $1.5-2bn EV for over 2 years and we don’t see a near/medium-term fix".
The firm's key cancer pipeline has ~three to four years to market and has a high cash burn rate, along with unclear differentiation in highly competitive end-markets.
Additionally, Galapagos' merger and acquisition strategy, which is centered on early-stage assets, is perceived as a limitation.
This approach is seen as unlikely to prompt investors to reassess the heavy cash discount currently reflected in the stock price.
"Further, the company’s M&A focus on early-stage assets limits the risk that investors will unwind the heavy cash discount priced in stock. Thus, we do not expect an upside until we see a clearer path to value creation"."So far, GLPG’s lymphoma CAR-T looks no better than competitors in a crowded market," adding they see 2024 as a relatively catalyst-light year for GLPG.
The analyst concluded that without a clearer path to value creation, it is unlikely that the stock will see any significant upside. The firm's current position and market strategy do not appear to support a more optimistic outlook in the near to medium term.