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Galapagos (NASDAQ:GLPG) American depositary shares fell 2.1% in premarket trading after BofA downgraded the company to Underperform as few catalysts emerge in the near term.
“A pre-commercial stage biotech developing therapies for oncology and immunological disorders, GLPG's enterprise value has remained stagnant at Negative EVs of between $1.5 and $2 billion for more than 2 years and we do not see a solution in the short or medium term,” the analysts said.
Analysts said the rating cut is also due to concerns that the stock remains a value trap.
The company's key cancer portfolio has three to four years to market and has a high cash burn rate, along with unclear differentiation in highly competitive end markets, BofA said.
“In addition, the company's M&A focus on early-stage assets limits the risk of investors reversing the steep cash discount priced into the stock. Therefore, we don't expect an upside until we see a further path forward.” clear direction towards value creation,” the note states.
The note also notes that GLPG is a “late product” in most key markets. therefore, analysts see less commercial opportunity for GLPG's CAR-T candidates.
“So far, GLPG's CAR-T lymphoma does not look better than its competitors in a crowded market,” the analysts said, adding that they see 2024 as a relatively uncatalytic year for GLPG.
Analysts at SA and Quants rate the company as a Buy.
