On Tuesday, Leerink Partners issued a downgrade for Halozyme Therapeutics (NASDAQ:HALO) stock, changing its rating from Market Perform to Underperform. The firm also reduced its price target to $47.00 from the previous $63.00. According to InvestingPro data, Halozyme has demonstrated strong financial performance with a 76% gross margin and 25.65% revenue growth in the last twelve months, maintaining a perfect Piotroski Score of 9, indicating excellent financial strength. The adjustment followed a reassessment of the discounted cash flow (DCF) model used by the firm, which now includes a higher discount rate, up from 8% to 12%, and a lower terminal growth rate, dropping from -15% to -25%.
The revision in Halozyme’s stock outlook is primarily due to new draft guidance from the Centers for Medicare & Medicaid Services (CMS) regarding drug price controls set by the 2028 Inflation Reduction Act (IRA). The guidance suggests that combination products, which may include Halozyme’s hyaluronidase drug collaborations, could be subject to price negotiations 13 years after the approval of the original active ingredient rather than 13 years after the approval of the combination product.
Leerink Partners has also adjusted its stance on Johnson & Johnson (NYSE:JNJ), downgrading the stock from Outperform to Market Perform and lowering the price target from $169 to $153. This new target is based on a 14x multiple of the unchanged 2026 estimated earnings per share (EPS) of $10.89. The firm has not made any changes to its revenue projections at this time, as it awaits final guidance from CMS expected in the second half of 2025.
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