RBC Downgrades Intercept Pharma On Valuation, Remains Positive On Upcoming Trial Data

Following the 90-percent year-to-date appreciation in Intercept Pharmaceutical, Inc. (NASDAQ: ICPT) shares, RBC Capital Markets considers the stock's risk-reward to be balanced. 

The Analyst

RBC Capital Markets analyst Brian Abrahams downgraded Intercept from Outperform to Sector Perform with a $115 price target.

The Thesis

RBC remains positive on the company’s Regenerate trial for patients with advanced liver fibrosis, Abrahams said in the Wednesday downgrade note. (See the analyst's track record here.) 

“ ... We continue to believe the interim REGENERATE analysis [the first half of 2019] is more likely than not to be positive,” the analyst said. 

The balanced reward-risk valuation is driven by the considerable rise in share price, Abrahams said. While expectations for trials such as REGENERATE and NASH have not altered, the analyst said they were overly discounted before the run-up. 

Peer NASH company valuations illustrate similar expectations, Abrahams said. 

“Interestingly, we note that the gap in valuation between ICPT and Madrigal Pharmaceuticals Inc (NASDAQ: MDGL) has closed ... further suggesting we may have reached a more balanced relative level."

Price Action

Intercept shares were trading down 7.3 percent to $103.50 at the time of publication Wednesday.

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