Analyst Sees Incyte Worth 70% More

The leading product for Incyte is Jakafi, which is the first and only drug approved for the treatment of myelofibrosis, a rare blood cancer. The company has large pipeline outside of this, including treatments for rheumatoid arthritis and various cancers.

While it is not yet profitable, Incyte boasts a large distribution network and key R&D partnerships with Merck, Novartis and Eli Lily. These add to the value and make the company a potential takeover candidate in the current environment of health care mergers and acquisitions.

Incyte shares have underperformed in the past quarter, falling 13% versus the S&P, which has gained 2%. However, these shares have been fairly volatile over the past year, gaining 33% against a 17% gain in the broad market. Looking at the shares currently, we can see that they are 32% below the 52-week high.

A pro forma net loss of $36.9 million was reported for the second quarter, driving the share price down, but this is attributable to a higher R&D expense and an increase in selling and general administrative expenses related to the commercialization of Jakafi. However, sales estimates have been lifted for the year, as Jakafi has revised estimates of $330 million to $340 million from $315 million to $335 million for its sales.

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Argus has maintained a Buy rating for the stock with a price target of $85, citing that Incyte is largely discounted and offers a severe upside — all the way from under $50.

Incyte traded at $48.26 just after the opening bell Thursday, and it has a consensus price target of $75.15 and a market cap of $8.13 billion. Its 52-week trading range is $31.01 to $70.86.