Replies to post #171040 on Biotech Values

[ronpopeil]

Up $5 now. Wow!

[DewDiligence]

ENTA—Musings on Credit Suisse’s new $36 price target*:

Our FY'14, FY'15, and FY'16 EPS estimates are $1.18, $3.78, and $1.94 respectively due to housekeeping model changes.

In general, no experienced investor takes this kind of statement seriously. When the share price rises above an analyst’s prior price target, the analyst invariably responds by raising the price target, which requires tweaking the valuation model by making “housekeeping changes.” (You can’t have a Buy rating on a stock with a price target lower than the current share price!)

In this instance, however, Credit Suisse’s raised price target is entirely logical insofar as the ABBV/ENTA’s SAPHIRE-2 data are even more impressive than the SAPHIRE-1 data for the reasons mentioned in #msg-94817670.

In due course, CS—and other analysts who follow ENTA—will probably have to admit that their new price targets based on their projected ABT-450 royalties are still too low, and they will have to creep closer to my valuation model (#msg-92235183, #msg-92239448).

*See #msg-94825441 for the report summary.

[DewDiligence]

ABBV/ENTA’s SAPHIRE-2 data (#msg-94817670) are so strong that, realistically, GILD can only hope to match them rather than exceed them.

No one I know expected a 96% SVR rate in this patient pool (treatment-experienced GT1a/GT1b of whom 49% were prior null responders) without any hint of a safety or tolerability problem.

[alertmeipp]

ENTA: Dew, many thanks for the idea.