By Michael Elkins
Piper Sandler initiated coverage of Incyte (NASDAQ: INCY ) with an Overweight rating and $100.00 price target as analysts see potential growth in the company's venture into the dermatology space.
For the past 7+ years, Incyte corporation's shares have been somewhat range-bound. However, the analysts believe that the revenue expectations surrounding the company's topical ruxolitinib product, Opzelura, are too low for 2023 and the out-years. The analysts' opinion is supported by extensive dermatologist survey work that is bullish on Opzelura uptake in both atopic dermatitis and vitiligo.
As of January, the user base in vitiligo is close to 90% (88%), with docs having initiated an average of ~9 vitiligo patients. This is up significantly from August when the prescriber base stood just under 60% and docs had initiated an average of 3 vitiligo patients on Opzelura.
Piper Sandler notes that this feedback on patient initiations may also pinpoint the mix between vitiligo and AD revenue for Opzelura over time. However, without additional visibility on the number of tubes per patient type per period, it's difficult to say too much about the current revenue split between these indications.
The analysts wrote in a note, "Our view that Opzelura itself is a multi-billion dollar product, and that it can serve as a nice base upon which INCY can build its dermatology franchise going forward, is our primary rationale for our constructive view on the stock. We believe that as the Opzelura launch continues to play out this year, the stage is set for a series of beats/raises, which can in turn drive Opzelura revenue estimates higher. In our experience, this makes for a good setup for the shares, as increasing revenue estimates tend to be accompanied by an increasing share price."
Piper Sandler models WW Opzelura revenue at $476M, $836M, $1,102M, $1,339M, and $1,602M for FY23- FY27, respectively, vs consensus of $366M, $558M, $741M, $914M, and $1,071M.
Shares of INCY are up 2.02% in mid-day trading on Tuesday.
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