Incyte’s Strategic Moves Amid Share Buyback and Pipeline Expansion: A Balanced Hold Rating

JMP Securities analyst Reni Benjamin has maintained their neutral stance on INCY stock, giving a Hold rating on May 13.

Reni Benjamin has given his Hold rating due to a combination of factors impacting Incyte’s financial outlook and strategic maneuvers. The recent announcement of a share repurchase up to $2 billion, with a combination of a $1.67 billion tender offer and a $328 million stock purchase agreement with Baker Bros., is a temporary measure that could benefit shareholders in the long run. However, Benjamin considers this buyback not the most efficient use of capital, especially in light of the approaching patent cliff for ruxolitinib in 2028, the absence of significant near-term milestones, and a substantial cash position. Despite the potential for EPS increase from the buyback, he perceives the shares as fairly valued when factoring in both earnings per share and revenue multiple analyses.
Furthermore, Benjamin acknowledges the upcoming PDUFA date for axatilimab in chronic graft-versus-host disease (cGVHD), with a high likelihood of FDA approval based on promising trial results. This could be a positive catalyst for Incyte. Additionally, he notes Incyte’s expansion efforts through the acquisition of Escient Pharmaceuticals, which adds two clinical-stage molecules to its portfolio. Although this acquisition could enrich Incyte’s pipeline, tangible proof-of-concept data for the molecules is not expected until early 2025. The Hold rating reflects a cautious optimism tempered by the need for strategic mergers and acquisitions to bolster the company’s long-term growth prospects.

Benjamin covers the Healthcare sector, focusing on stocks such as Incyte, Iovance Biotherapeutics, and Blueprint Medicines. According to TipRanks, Benjamin has an average return of -6.2% and a 34.55% success rate on recommended stocks.

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Incyte (INCY) Company Description:

Incyte Corp. is a biopharmaceutical company, which engages in the discovery, development and commercialization of proprietary therapeutics. Its portfolio includes compounds in various stages, ranging from preclinical to late stage development, and commercialized products such as JAKAFI (ruxolitinib), and ICLUSIG (ponatinib). The company was founded by Roy A. Whitfield in April 1991 and is headquartered in Wilmington, DE.