Cabometyx And Tovorafenib Approvals May Strengthen Oncology Portfolio In 2025

Key Takeaways

• Expansion of Onivyde and new product approvals could significantly increase revenue and strengthen market positions in key medical segments.
  
• Strategic acquisitions and external innovation plans aim to enhance margins and drive top-line growth through integration of high-performing assets.
  
• Competitive pressures and strategic R&D spending challenges may impact Ipsen's margins and future revenue, amid existing struggles in key products.

Catalysts

Operates as a biopharmaceutical company worldwide.

• The anticipated approval of Cabometyx in neuroendocrine tumors in the EU and the EU regulatory filing of tovorafenib could drive an increase in revenue in the first half of 2025.
  
• The ongoing expansion of Onivyde in first-line pancreatic ductal adenocarcinoma and broader uptake from academic centers to community practices is expected to significantly bolster revenue growth moving forward.
  
• The development of the Long-Acting Neurotoxin (LANT) in aesthetics and other indications, with proof-of-concept data anticipated in the second half of 2025, could contribute to higher earnings by attracting a larger market share and enhancing margins through premium pricing.
  
• The strategic entry into additional markets with Iqirvo, coupled with ongoing launches in the U.S. and Europe, positions Ipsen to benefit from increased sales and profitability in the evolving rare disease segment.
  
• Ipsen's firepower of €2.3 billion earmarked for external innovation and its commitment to strategic acquisitions may catalyze top-line growth and expand margins by integrating new high-performing assets.

Ipsen Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Ipsen's revenue will grow by 5.8% annually over the next 3 years.
• Analysts assume that profit margins will increase from 10.0% today to 18.6% in 3 years time.
• Analysts expect earnings to reach €786.1 million (and earnings per share of €9.47) by about February 2028, up from €355.9 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €1.0 billion in earnings, and the most bearish expecting €552.2 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.5x on those 2028 earnings, down from 25.5x today. This future PE is lower than the current PE for the GB Pharmaceuticals industry at 18.5x.
• Analysts expect the number of shares outstanding to decline by 0.26% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 5.66%, as per the Simply Wall St company report.

Ipsen Future Earnings Per Share Growth

Risks

• The financial performance of Sohonos is a concern, as it continues to struggle with lower-than-anticipated patient uptake, resulting in a significant impairment loss. This negative impact on sales and the revised peak sales expectations will likely affect net earnings.
  
• Somatuline faces increased competition from generics in both the U.S. and Europe, which is expected to accelerate its erosion, impacting revenue and, consequently, net margins.
  
• Decapeptyl has experienced a decrease in sales, attributed to increased competition and pricing pressures in Europe and China. This could continue to challenge the growing revenue within the oncology segment.
  
• There are additional R&D expenses planned for potential early and mid-stage innovation opportunities, which might lead to a contraction in operating margins if they don't translate into successful product launches.
  
• The U.S. aesthetics market, despite Dysport's growth, faces reported softening, which could affect revenue growth if market demand declines further.

Valuation

• The analysts have a consensus price target of €127.6 for Ipsen based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €156.0, and the most bearish reporting a price target of just €110.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €4.2 billion, earnings will come to €786.1 million, and it would be trading on a PE ratio of 15.5x, assuming you use a discount rate of 5.7%.
  
• Given the current share price of €110.4, the analyst price target of €127.6 is 13.5% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.