On Friday, UBS downgraded Coherus Biosciences (NASDAQ:CHRS), shifting its rating from Buy to Neutral. The firm also reduced the price target for the biotechnology company's shares to $1.50, a significant decrease from the previous target of $4.00. This adjustment comes amid concerns regarding the company's financial outlook and asset monetization strategy.
The downgrade by UBS was influenced by a reassessment of Coherus Biosciences' revenue growth projections. Following the monetization of the company's products, Yusimry and Cimerli, the expected compound annual growth rate (CAGR) for revenues from 2024 to 2028 has been revised to a decline of 4%, a stark contrast to the previously projected increase of 13%. This adjustment reflects the changing expectations for the company's financial performance over the next several years.
UBS noted that while Coherus Biosciences has been successful in monetizing assets to reduce its debt, the current outlook for cash burn and leverage remains a concern. The financial firm believes that the anticipated revenue decline is already factored into the current stock price. Therefore, UBS sees a balanced risk/reward scenario for investors at the stock's current levels.
The firm's analysis suggests that the market has already adjusted its valuation of Coherus Biosciences to account for the expected mid-single digit revenue decline. This implies that the stock price may have reached a point where potential risks and rewards are evenly matched, according to UBS's assessment.
In summary, UBS's reevaluation of Coherus Biosciences' stock reflects a more cautious stance on the company's future revenue and financial health. The new Neutral rating and lower price target are indicative of the challenges that the biotech firm may face in the coming years as it navigates its financial strategy and market position.
In other recent news, Coherus BioSciences, Inc. has seen several significant developments. The company has entered into a major agreement with Apotex Inc., securing an exclusive license to commercialize the cancer drug toripalimab in Canada.
This follows Coherus's 2021 collaboration with Shanghai Junshi Biosciences Co., Ltd. The terms of the agreement include an upfront payment of $6.25 million from Apotex to Coherus, with potential milestone payments that could total up to CAD 51.5 million.
In addition, Coherus reported substantial revenue growth during its first quarter 2024 earnings call, attributed to the US FDA approvals and market launches of Loqtorzi and the Udenyca on-body injector.
The company also sold the rights to Yusimry, a biosimilar to Humira, for $40 million. Baird adjusted its outlook on Coherus, reducing the price target to $8 from the previous $9, while maintaining an Outperform rating.
TD Cowen has maintained its Buy rating for Coherus, indicating confidence in the company's strategic direction and the anticipated success of its product pipeline.
The launch of Loqtorzi is progressing well, and its pipeline products, including Casdozokitug, CHS-114, and CHS-1000, are being closely watched for their potential market impact. These are all recent developments for Coherus BioSciences, Inc.
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