On Thursday, Evercore ISI adjusted its price target on shares of NovoCure Ltd. (NASDAQ:NVCR), a global oncology company, bringing it down to $14.50 from the previous $15.00 while maintaining an In Line rating on the stock.
The revision followed NovoCure's latest earnings report, which showed a 13% year-over-year increase in revenues to $139 million, surpassing Street estimates. This increase included approximately $4.2 million from prior period claims in the U.S., and excluding these, the revenue beat was around 3%.
NovoCure's active patient count and total prescriptions grew by about 10% year-over-year. A significant contribution came from overseas markets, particularly France, where Other TRx observed a 115% growth year-over-year. The company anticipates the French market opportunity to be comparable to that of Germany.
The company's gross margins were reported above Street expectations, and operational expenses decreased quarter-over-quarter, resulting in a narrower operating profit loss compared to Street estimates. On the clinical front, management indicated that their Day-100 meeting with the FDA regarding the LUNAR PMA application was positive, with no indication from the FDA of needing an advisory panel.
NovoCure also announced a new $400 million credit facility with Pharmakon Advisors, providing the company with added financial flexibility; $100 million of this facility has already been drawn down. No new changes were reported in the company's pipeline, with full data from the METIS study expected to be presented at the American Society of Clinical Oncology (ASCO) meeting in June, and the PANOVA-3 trial readout anticipated in the second half of the year.
The firm highlighted NovoCure's operational discipline as a key takeaway from the report. Looking ahead, the next major catalyst for the company's stock is expected to be the PANOVA trial readout in the fourth quarter. The firm noted that even with potential FDA approval for its second-line NSCLC indication, discussions regarding reimbursement and product uptake remain.
In the interim, without a significant clinical milestone, NovoCure is viewed as a mid-single-digit revenue growth company with negative free cash flow, presenting challenges in valuation. The firm reiterated its in-line rating with the revised price target of $14.50.
InvestingPro Insights
As NovoCure Ltd. (NASDAQ:NVCR) navigates through its financial and clinical developments, insights from InvestingPro provide a deeper understanding of the company's financial health and market perception. The company's market capitalization stands at $1.53 billion, reflecting investor sentiment and market size.
Despite a challenging year with a price decline of over 80%, NovoCure holds a substantial gross profit margin of approximately 75% over the last twelve months as of Q1 2023, indicating its ability to retain a significant portion of sales as gross profit.
InvestingPro Tips suggest that NovoCure's balance sheet is resilient, holding more cash than debt, which provides the company with financial stability and flexibility. Additionally, two analysts have revised their earnings upwards for the upcoming period, hinting at potential optimism around the company's future performance.
Still, it is important to note that analysts do not anticipate the company will be profitable this year, which aligns with the firm's view of NovoCure as a mid-single-digit revenue growth company with negative free cash flow.
For investors seeking a more comprehensive analysis, there are additional InvestingPro Tips available at: https://www.investing.com/pro/NVCR. By using the coupon code PRONEWS24, readers can receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking further insights into NovoCure's valuation, including its price to earnings (P/E) ratio, and price to book (P/B) ratio, which stand at -6.05 and 3.78 respectively as of the last twelve months ending Q4 2023.
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