Citi spotlights Ligand as 'Goldilocks’ pick' for conservative biotech investors
Equity investors should take a closer look at mid-cap Ligand Pharmaceuticals for a more conservative bet on the biotech industry, Citigroup argues. In his initiation report (as quoted by CNBC), Citi analyst Yigal Nochomovitz highlights Ligand as "the 'Goldilocks’ pick for investors seeking exposure to biotech upside while mitigating volatility” thanks to its broad portfolio of products.
Details
Nochomovitz has initiated coverage of Ligand Pharmaceuticals with a “buy” rating and a target price of $270 per share, CNBC reports. The valuation implies upside of about 45% relative to the Tuesday, December 9, closing price of $185.83 per share. (Trading that day ended with a 0.6% increase.)
He recommends Ligand as a more conservative entry point into the biotech industry. While most companies in the segment go all-in on one or two drugs, Ligand stands out for its approach built around diversification.
About Ligand
The company’s investment strategies include the following.
Royalty aggregation of development/commercial-stage assets: Ligand manages one of the largest and most diversified royalty portfolios in the biopharmaceutical industry, which includes more than 90 development-stage and commercial-stage programs.
Investments in mid- to late-stage clinical programs in exchange for future royalty rights
Out-licensing of novel platforms to other pharmaceutical companies: One platform has been used by Amgen, Merck, Pfizer, and Gilead to enhance the solubility of remdesivir for the treatment of COVID-19, according to the company’s website.
This approach limits volatility, avoids concentration risk around a single drug, and preserves growth potential, Nochomovitz explains. In his view, Ligand is “the ‘Goldilocks’ pick for investors seeking exposure to biotech upside while mitigating volatility.”
Stock performance
Ligand shares are up about 0.3% in trading on Wednesday at $186.40 per share as of this writing. Year to date, the stock has gained more than 73%. Still, further growth is expected by the consensus, according to MarketWatch data. The average target price for the company’s shares is $242.33 per share, 30.4% above current levels. All eight analysts covering the stock now recommend “buy.”
