Incyte’s Share Buyback Program: A Buy Rating and Fundamental Value Increase

Andrew Berens, an analyst from Leerink Partners, maintained the Buy rating on Incyte (INCY – Research Report). The associated price target remains the same with $80.00.

Andrew Berens has given his Buy rating due to a combination of factors surrounding Incyte’s recent announcement of a share buyback program. The buyback, which is a mix of a modified “Dutch Auction” and a direct stock purchase from a major shareholder, is seen as a positive short-term indicator. Berens interprets the buyback as a sign of management’s belief that the stock is currently undervalued and anticipates that it will provide an immediate uplift to the company’s free cash flow per share. His analysis suggests an increase of $4 per share in fundamental value as a result of this transaction.
Despite this, Berens acknowledges potential investor concerns regarding Incyte’s long-term strategy, particularly relating to the looming expiration of patent exclusivity for Jakafi in 2028-29. There are questions as to why the funds are not being directed towards internal development or external business development (BD) deals. Nevertheless, after discussions with management, Berens is reassured by their claim of sufficient liquidity to remain opportunistic in BD, supported by projected cash flows. The success of the buyback and its classification as a prudent investment will ultimately depend on whether the share price appreciates significantly post-buyback or if the boost is merely ephemeral.

According to TipRanks, Berens is a 2-star analyst with an average return of 0.1% and a 41.46% success rate. Berens covers the Healthcare sector, focusing on stocks such as AstraZeneca, Immunome, and Incyte.

In another report released on May 1, TD Cowen also maintained a Buy rating on the stock with a $80.00 price target.

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Incyte (INCY) Company Description:

Incyte Corp. is a biopharmaceutical company, which engages in the discovery, development and commercialization of proprietary therapeutics. Its portfolio includes compounds in various stages, ranging from preclinical to late stage development, and commercialized products such as JAKAFI (ruxolitinib), and ICLUSIG (ponatinib). The company was founded by Roy A. Whitfield in April 1991 and is headquartered in Wilmington, DE.