On Tuesday, Wolfe Research upgraded argenx SE (NASDAQ: ARGX) stock from Peerperform to Outperform with a price target of $697.00. The firm anticipates a positive trajectory for the company through 2025, driven by its myositis and PFS programs, and expects argenx to maintain its dominant status in the myasthenia gravis (MG) market, especially after updates from competitors Biohaven and Immunovant (NASDAQ:IMVT).
The analyst from Wolfe Research predicts that argenx will see a rise in earnings, partly due to its performance in MG and PFS, which will likely propel the stock in 2025. The company's history of surpassing revenue expectations is believed to be linked to stock movement.
The firm also notes that argenx is undergoing structural changes, with a trend towards positive operating margins, and forecasts that 2025 will mark argenx's first profitable year, with expected EBIT figures of ($112M), $450M, and $1.1B over 2024-26.
The analyst compares argenx's financial outlook to that of Alnylam Pharmaceuticals (NASDAQ:ALNY) (downgraded to Underperform), stating that argenx is better positioned to achieve R&D and commercial synergies. The firm expects argenx's increasing operating margin to attract more long-only investors. Historical examples from other biotech firms that have seen stock boosts following margin improvements were cited to support this outlook.
Wolfe Research has revised its revenue expectations for argenx upwards, particularly in the MG market, due to strong execution and reduced competition.
The firm remains somewhat bearish on the chronic inflammatory demyelinating polyneuropathy (CIDP) indication but is optimistic about upcoming indications such as Sjogren's, dermatomyositis (DM), and thyroid eye disease (TED).
The combined global peak sales for argenx's lead product, Vyvgart, are estimated at around $12 billion by 2037, which could position it as a blockbuster drug comparable to Dupixent.
The analyst concluded that argenx's research and development in Vyvgart are promising, and the company's strategic positioning across both benefit designs will likely provide a strong defense against biosimilars. The upgrade to Outperform reflects Wolfe Research's confidence in argenx's easier path to 2025, its long-term revenue potential, and its transition to profitability.
In other recent news, argenx SE has seen a series of upgrades and downgrades from various analyst firms following strong sales and revenue results.
Scotiabank (TSX:BNS) significantly increased its price target for argenx to $715, attributing it to the promising sales and potential of efgartigimod, particularly in the myasthenia gravis treatment market.
Deutsche Bank (ETR:DBKGn) raised its price target to €525, acknowledging the company's strong financial performance.
Oppenheimer increased its price target to $646 following the company's successful launch of Vyvgart Hytrulo for chronic inflammatory demyelinating polyneuropathy (CIDP).
Piper Sandler raised its price target for argenx to $620, given the strong sales figures for Vyvgart. Leerink Partners increased its price target to $635, following another quarter of robust sales for Vyvgart.
These upgrades came after argenx reported significant earnings and revenue results, with third-quarter net product revenue reaching $573 million, surpassing estimates set by Oppenheimer and consensus forecasts.
However, Baird downgraded argenx to Neutral, suggesting limited short-term upside, while William Blair upgraded the stock to Outperform. These are the recent developments for argenx, which continues to focus on high-impact programs and robust sales growth.
InvestingPro Insights
The recent upgrade of argenx SE (NASDAQ: ARGX) by Wolfe Research aligns with several key metrics and insights from InvestingPro. The company's strong financial position is evident from InvestingPro data, which shows that argenx holds more cash than debt on its balance sheet. This solid financial footing supports the firm's ability to invest in its promising research and development programs, particularly for Vyvgart.
InvestingPro Tips indicate that net income is expected to grow this year, and analysts predict the company will be profitable this year. This aligns with Wolfe Research's forecast of argenx transitioning to profitability, with 2025 potentially marking its first profitable year. The expectation of positive earnings is further reinforced by the fact that 5 analysts have revised their earnings upwards for the upcoming period.
The company's robust revenue growth is reflected in the InvestingPro data, which shows an impressive revenue growth of 85.56% over the last twelve months. This strong performance supports Wolfe Research's optimism about argenx's market position and potential for continued success in the myasthenia gravis market and beyond.
It's worth noting that argenx is trading near its 52-week high and has shown a strong return over the last month and six months, with a 57.21% price total return over the past six months. This positive momentum in the stock price aligns with the analyst's bullish outlook on the company's future prospects.
For investors seeking more comprehensive insights, InvestingPro offers 13 additional tips for argenx, providing a deeper understanding of the company's financial health and market position.
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