UBS analyst upgraded shares of Otsuka Holdings Co (OTC:OTSKY) Ltd. (4578: JP) (OTC: OTSKY), shifting the rating from Neutral to Buy.
The financial institution also increased the price target for the stock to JPY10,000.00, up from the previous JPY6,200.00. This adjustment reflects a more optimistic outlook on the company's prospects, particularly regarding its pharmaceutical developments.
The upgrade comes as UBS revises its earnings per share (EPS) forecasts for Otsuka Holdings for the fiscal years ending in December 2024, 2025, and 2026. The new projections show a decrease of 9% for FY12/24, but an increase of 16% for FY12/25, and a further 11% increase for FY12/26.
VIS649 has been a key focus for the company, with UBS now estimating its sales using a patient market model. While initial expectations were for peak sales of approximately ¥100 billion, the analysis suggests that if VIS649 captures a 20% market share—given there is no current therapeutic drug for its indication—its post-risk adjusted peak sales could reach ¥300 billion, assuming a 70% success rate.
The anticipation of Phase 3 results for VIS649 in the first half of 2025 adds to the positive outlook, as positive data could lead to an application for accelerated approval and sales contributions starting from 2026.
Additionally, UBS has factored in JNT-517, a drug from the pipeline of Jnana Therapeutics, which was acquired by Otsuka. The new price target of JPY10,000.00 is derived from the net present value (NPV) of Otsuka's pharmaceutical business combined with the NPV of its nutraceutical (NC) business.
InvestingPro Insights
Following the UBS analyst upgrade, a look at the real-time data from InvestingPro provides a broader perspective on Otsuka Holdings Co Ltd . (OTSKY). With a market capitalization of $30.74 billion and a high earnings multiple of 34.68, the company's valuation is robust despite analysts anticipating a sales decline in the current year. The adjusted P/E ratio for the last twelve months as of Q2 2024 stands at 13.9, reflecting a more favorable earnings perspective when normalized for certain factors.
InvestingPro Tips highlight OTSKY's position as a prominent player in the Pharmaceuticals industry, with a history of maintaining dividend payments for 14 consecutive years. Moreover, the stock generally trades with low price volatility, which might appeal to investors seeking stability. For those interested in the company's financial health, OTSKY's liquid assets exceed its short-term obligations, and it operates with a moderate level of debt. These factors, coupled with a strong return over the last three months, with a price total return of 37.38%, underscore the company's solid performance.
For investors looking for comprehensive analysis and additional insights, InvestingPro offers more tips on OTSKY, which can be accessed through their platform. The insights provided here are just a glimpse, and for a more in-depth understanding, there are 11 more tips available, including details on the company's profitability over the last twelve months and its price performance over various time frames.
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