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29 Feb 2024
Still a top pick; raising PT on LT growth confidence
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Still a top pick; raising PT on LT growth confidence
UCB (UCB:EBR), 0 | UCB S.A. (UCB:BRU), 0
- Published:
29 Feb 2024 -
Author:
Parkes Richard RP | Steventon Gary GS | Floch Victor VF -
Pages:
12
Strong end to the year and bullish messaging; raising PT to EUR125
We expect UCB''s confident messaging over Bimzelx uptake and achievement of near-term consensus forecasts to drive growing investor confidence as the company enters what we expect to be a sustained period of strong growth. We continue to believe UCB offers unique exposure to innovation driven growth in EU mid cap Biopharma and expect execution on new launches and a strong flow of pipeline catalysts through 2024 to continue to drive the shares through the year.
On track for return-to-strong growth; 23-27E sales/Core EPS CAGR = 9%/22%
We have raised our peak Bimzelx sales (EUR3.0bn vs EUR2.4bn) given solid uptake post the US launch, confident management messaging and expected impact of expanded approvals later this year. Although we trim our near-term margin forecasts given investment behind new launches, we are consistent with mid-term targets which imply a marked acceleration in EBITDA growth in ''25 (BNPPE 40% yoy) and expect sustained strong dd earnings growth (23-27 EPS CAGR 22%).
Key catalysts; launch momentum and pipeline delivery
Key catalysts in 2024: (1) Rx data for new launches (Bimzelx/Rystiggo); (2) Bimzelx expanded approvals and likely acceleration in sales; (3) P2/pivotal data for Rystiggo in new indications (MOG, AIE, FMS); (4) P2/3 data on higher risk but largely unmodelled pipeline drugs (AD, PD, SLE); (5) P2 data on pipeline drugs including two AD antibodies (one an IL-13/IL17AF bispecific).
Increasing PT on raised Bimzelx and LT growth assumptions
Our raised PT of EUR125 (from EUR100) reflects raised Bimzelx forecasts and increased confidence in long-term growth given patent settlements on Fintepla that will secure exclusivity until late 2033. We expect execution on UCB''s five ongoing launches to drive the shares; with 25% upside based on an assumed c.18x 2025 core PE we reiterate our Outperform rating.