On Thursday, Astellas Pharma Inc (4503:JP) (OTC: ALPMY) was downgraded from Buy to Hold by Jefferies, with a revised price target set at JPY1,700, a decrease from the previous JPY2,100. The firm's decision follows a reassessment of revenue and EBITDA forecasts for the pharmaceutical company over the next five years.
The adjustment in Astellas' stock rating is attributed to a reduction in projected revenues, which have been lowered by an average of 5%, and EBITDA estimates, which have seen an average cut of 17%. The revised financial outlook stems from scaled-back sales expectations for several of Astellas' treatments, including its overactive bladder medication Mirabegron, Veozah for hot flash treatment, and Izervay, which is aimed at treating geographic atrophy.
Jefferies has applied a 10x target EV/EBITDA to Astellas' fiscal year March 2026 estimates to determine the new price target. The new target reflects a significant reduction from the previous estimate, aligning more closely with the current trading price of Astellas' shares.
The downgrade to a Hold rating suggests that Jefferies no longer expects the stock to outperform the market, given that the new price target is in line with the company's current share price. This strategic shift indicates a more conservative outlook on the company's financial performance in the foreseeable future.
InvestingPro Insights
In light of the recent downgrade of Astellas Pharma Inc (OTC: ALPMY) by Jefferies, investors may find additional context in the latest data and insights from InvestingPro. The company's stock has been a subject of interest due to its consistent dividend history, having raised its dividend for 9 consecutive years and maintained payments for 33 years. Moreover, Astellas has demonstrated a strong return over the last three months with a 12.35% price total return, reflecting a resilient performance in the market.
However, the InvestingPro data shows a P/E Ratio of 178.32, which is quite high and suggests that the stock is trading at a premium compared to earnings. This aligns with one of the InvestingPro Tips indicating that the stock is trading at a high earnings multiple. Additionally, the stock's RSI suggests it is in overbought territory, which could signal caution for potential investors. On the positive side, the company's cash flows are robust enough to comfortably cover interest payments, and it is a prominent player in the Pharmaceuticals industry.
For investors seeking a more in-depth analysis, InvestingPro offers additional tips on Astellas Pharma Inc, which can be accessed by visiting the dedicated page at https://www.investing.com/pro/ALPMY. Use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 6 more InvestingPro Tips available that could provide valuable insights into the company's financial health and stock performance.
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