Goldman Sachs just made a series of big moves in U.S. biopharma coverage lifting ratings on Johnson & Johnson (NYSE:JNJ) and Eli Lilly (NYSE:LLY) while cutting Pfizer (NYSE:PFE), AbbVie (NYSE:ABBV), and Bristol Myers Squibb (NYSE:BMY) to Neutral.
Eli Lilly, which had seen a three-day decline, was upgraded to Buy by analyst Asad Haider. He said the company's strong position in the obesity drug market offers a compelling entry point. Still, Goldman slightly lowered its price target for the stock to $888 from $892.
Johnson & Johnson also got a boost to Buy. Haider said concerns about losing patent protection on its blockbuster drug Stelara may be overstated. He pointed out that pharmaceutical valuations tend to bottom out about a year before major losses of exclusivity, which could work in J&J's favor. Goldman raised its 12-month price target to $172 from $157.
On the flip side, AbbVie was downgraded to Neutral. Haider noted that investors already seem to have priced in the growth potential of its newer immunology drugs, Skyrizi and Rinvoq, following the Humira patent loss. The price target was cut to $194 from $212.
Pfizer also moved down to Neutral, with its target reduced to $25 from $32. Goldman thinks the benefits of Pfizer's cost-cutting and COVID-related M&A efforts in oncology will take time to show up in its share price.
Bristol Myers got the same treatment. Goldman said recent cost-cutting moves are already reflected in the stock, and its $67 target was cut to $55. The firm flagged looming patent cliffs and warned that bridging the expected revenue drop will be a significant challenge.
https://finance.yahoo.com/news/biopharma-shakeup-goldman-boosts-j-175813148.html
On Tuesday, Goldman Sachs initiated coverage on Viking Therapeutics (NASDAQ:VKTX) with a Neutral rating and a price target of $30.00. The stock, currently trading at $21.28, has experienced significant pressure, declining over 70% in the past year. Viking maintains a strong financial position with more cash than debt on its balance sheet. The firm’s analysis pointed to the competitive nature of the obesity treatment market as a significant challenge for Viking’s lead asset, VK2735. The therapy, a dual GLP-1/GIP agonist, has shown promise in Phase 2 trials, demonstrating potency and safety. However, Goldman Sachs highlighted the high barriers to entry in the obesity market, such as price erosion, payer restrictions, and the need for rebates to pharmacy benefit managers (PBMs).
The Goldman Sachs report underscored that VK2735 might face disadvantages without clinical evidence of additional health benefits, unlike many competitors that have shown or are developing treatments for type 2 diabetes (T2D), cardiovascular, renal, and liver benefits. The crowded market, with many next-generation therapies on the horizon, could pose further difficulties for Viking Therapeutics, especially as a smaller entity with fewer resources.
Goldman Sachs’ neutral stance is influenced by the projected risk-adjusted peak sales for VK2735, which they estimate at $2.8 billion compared to the consensus of $9.2 billion. This conservative forecast reflects the firm’s cautious outlook on Viking Therapeutics’ potential to secure a significant share in the obesity drug market.
As Viking Therapeutics navigates the challenges of a hyper-competitive landscape, Goldman Sachs’ assessment suggests that the company’s success may hinge on its ability to differentiate VK2735 and overcome the market’s high entry barriers. With the price target set at $30.00, investors now have a benchmark against which to measure Viking Therapeutics’ progress in the coming months and years. Notably, analyst targets range from $38 to $164, reflecting diverse views on the company’s potential.
In other recent news, Viking Therapeutics has announced a strategic manufacturing agreement with CordenPharma to ensure a steady supply of its obesity treatment, VK2735. This deal includes the production of the drug’s active pharmaceutical ingredient and various product forms, preparing for a potential multi-billion-dollar market opportunity. Viking will prepay $150 million between 2025 and 2028 to secure these production capabilities. In terms of clinical developments, Viking has completed enrollment for the Phase 2 VENTURE-Oral trial of VK2735, which aims to assess the drug’s efficacy in weight loss over 13 weeks. Looking ahead, the company plans to enter Phase 3 trials for the subcutaneous form of VK2735 in 2025. H.C. Wainwright reaffirmed its Buy rating and $102 price target for Viking Therapeutics, citing confidence in VK2735’s potential. Conversely, Citi analysts initiated coverage with a Neutral rating and a $38 price target, highlighting the competitive nature of the obesity treatment market and the need for more safety data. These developments reflect the company’s ongoing efforts to position VK2735 as a significant player in the metabolic disease treatment landscape.
On Tuesday, KeyBanc Capital Markets initiated coverage on shares of Lifestance Health Group (NASDAQ:LFST), a behavioral health company, with an Overweight rating and set a price target of $9.00. The coverage launch is based on the firm’s positive outlook for the company’s growth prospects. Currently trading at $6.51, the stock sits between analyst targets ranging from $8 to $11.
KeyBanc analysts anticipate that Lifestance Health Group will experience mid-teens organic top-line growth over the next few years. This outlook aligns with the company’s impressive 18.5% revenue growth in the last twelve months and strong historical performance, with a five-year revenue CAGR of 43%. This growth is expected to be mainly fueled by an increase in visit volumes due to the addition of more clinicians and an improvement in total revenue per visit, which is likely to arise from better reimbursement rates from payors.
The analysts also predict that the company will see margin expansion, attributed to a recently optimized real estate footprint, enhanced clinician productivity, introduction of higher-margin specialty offerings, and ongoing cost efficiencies achieved through technology improvements.
A significant aspect of Lifestance Health Group’s business strategy, as highlighted by KeyBanc, is the company’s acceptance of over 150 different insurances. This wide range of accepted insurances is believed to contribute to higher patient retention and lower customer acquisition costs, leading to less revenue volatility and broader profit margins.
Furthermore, Lifestance Health Group’s approach to treatment, which includes both virtual and in-person visits, stands out as a unique feature. Approximately 70% of patient visits are conducted virtually, while the remaining 30% take place at one of the company’s more than 550 centers, which are spread across 33 states. This dual-channel offering is seen as a key differentiator for the company in the behavioral health space.
Update (1245ET): Stocks could not maintain joy on Tuesday after the White House confirmed that 104% additional tariffs will go into effect at noon ET because China refused to remove its retaliatory measures.
The new tariff will be collected beginning tomorrow, April 9th. Markets were predictably displeased.
We ran out of chart pic.twitter.com/3uuXcoNxXy
— zerohedge (@zerohedge) April 7, 2025
Clearly only another Ackman meltdown or Walter Bloomberg tweet can save us now.
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Update (1100ET): US equity market are fading rapidly from a huge start this morning...
...the top seemed to coincide with a renewed surge lower in China's offshore yuan...
...to a new record low against the dollar...
...further raising the specter of China trade war escalation with the possibility of a devaluation looming (as we detailed overnight).
The spread between Onshore Yuan (fixing) and offshore yuan is at its limit - something has to give.
Remember, China has three options:
China has three options:
— zerohedge (@zerohedge) April 4, 2025
1. Concede defeat to whatever terms Trump demands
2. Devalue the yuan by 20-40%
3. Unleash biggest fiscal stimulus in its history (talking $2-3 trillion) which will push its debt off the chart
Did that just decide to go with Option 2?
Notably the initial exuberant short-squeeze was unsustainable and has been hinting at the rally's fragility all morning...
Finally, bear in mind that, as Goldman noted, those paying attention during the first trade war in 2018 would remember similar wording from the MOFCOM in Apr 2018 when the spokesperson also said Beijing will “fight to the end” yet the two sides entered into talks just the month after.
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Update (1920ET): President Donald Trump sent futures accelerating to the upside on Tuesday after suggesting on Truth Social that China "wants to make a deal, badly, but they don't know how to get it started."
"We are waiting for their call," Trump continued, adding "It will happen!"
The comments come after China threatened various "countermeasures" in response to US tariffs - including increasing counter-tariffs on US agricultural products, prohibiting the import of US poultry, suspending China-US cooperation on fentanyl, restricting corporate trade, banning the import of American films, and reassessing the benefit US companies have gained from intellectual property in China.
"If the US escalates its tariff measures, China will resolutely take countermeasures to safeguard its own rights and interests," a ministry spokesperson said on Monday. "The US threat to escalate tariffs against China is a mistake on top of a mistake, which once again exposes the US's blackmailing nature. China will never accept this. If the US insists on going its own way, China will fight it to the end."
“The US hegemonic move in the name of ‘reciprocity’ serves its selfish interests at the expense of other countries’ legitimate interests and puts ‘America first’ over international rules,” embassy spokesman Liu Pengyu said in response to a question on the latest US move.
“China will firmly safeguard its legitimate rights and interests,” he said, without specifying any actions.
Needless to say - after China's threats, markets are so far pleased at Trump's response...
Wolfe Research says Monday’s sharp intraday reversal—driven by fake rumors of a 90-day tariff pause—highlights just how fragile markets are to tariff headlines right now. The firm believes the President “could stop or lessen the selloff with a single social media post,” given how…
— Wall St Engine (@wallstengine) April 8, 2025
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US Equity futures are accelerating gains following comments by US Treasury Secretary Bessent this morning that tariff negotiations are the result of massive inbound calls, not the market.
When asked about tax with Europe, says "everything is on the table."
Trump will be personally involved in negotiations.
Japan, South Korea and Taiwan may be engaged in Alaska deal (Early March, Trump said Japan, south Korea and others want to partner with US in a gigantic natural gas pipeline in Alaska).
If they are successful, tariffs would be a melting ice cube in a way.
Have discussed which countries to prioritize. Japan would get priority after swiftly reaching out to the US.
If there are solid proposals, could end up with some good deals.
As part of calculus with deals, some part of tariffs may stay on.
Bessent was not involved in the calculations of the tariff numbers.
Thinks escalation by China was a big mistake.
China has chosen to isolate itself by retaliating and doubling down on previous negative behavior.
US President Trump is committed to fixing trade imbalances.
The reaction was positive to Bessent's comments:
Watch Bessent's full interview here: "The President has maximum negotiating leverage. Many of our trading partners have not escalated, and they will get priority in the queue. I think it was a big mistake, this Chinese escalation."
BESSENT: The President has maximum negotiating leverage. Many of our trading partners have not escalated, and they will get priority in the queue. I think it was a big mistake, this Chinese escalation.
— Election Wizard (@ElectionWiz) April 8, 2025
pic.twitter.com/h2UgjWM9D6
Is the short-squeeze back sustainable?
Politico reports that Bessent is having some success steering the White House tariff messaging away from permanence and toward negotiations after warning Trump of further market losses.
