Street Calls of the Week: Compass downgrade - risk greater than reward
Investing.com — Here is your Pro Recap of the top takeaways from Wall Street analysts for the past week: upgrade for Coty, downgrades for Alkermes, Compass and Boeing.
InvestingPro subscribers always get first dibs on market-moving rating changes.
What happened? On Tuesday, UBS downgraded Alkermes (NASDAQ:ALKS) to Sell with a $25 price target.
What’s the full story? Despite the stock trading close to its 52-week high, ubs perceives negative risk/reward stemming from pipeline updates and launch performance. The current stock valuation implies approximately $2.2 billion in 2029 estimated sales (compared to their base case of $1.6 billion), suggesting high expectations for orexin clinical outcomes and robust Lybalvi growth. However, caution surrounds ALKS’ orexin Phase 1 read-out expected during the first half of 2024, with anticipated Lybalvi misses and potential consensus downward revisions. Specifically:
ALKS-2680 (orexin) is likely to exhibit significant tolerability issues at higher doses in the Phase 1 study for narcolepsy type 2 (NT2) and Idiopathic Hypersomnia.
Lybalvi growth, while solid, is showing signs of tapering, leading to UBS’s FY24-27E sales estimate being approximately 12% below consensus.
Sell at UBS means “Forecast Stock Return (FSR) is > 6% below the Market Return Assumption (MRA).”
How did the stock react? ALKS equity traded lower on the premarket headlines from $32.39 to $34.18, a decline of 2.18 percent. Alkermes opened the regular session at $31.04 and closed at $30.39, a decline of 5.58 percent.
What happened? On Wednesday, Gordon Haskett downgraded Compass (NYSE:COMP) to Underperform with a $2.25 price target.
What’s the full story? Gordon Haskett has downgraded Compass shares from Hold to
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