Maintaining Our $105 Incyte Fair Value Estimate Following Solid Q1 and Opzelura Launch Progress

We're maintaining our $105 per share fair value estimate for Incyte following solid first-quarter results. Incyte's top line grew 21% in the quarter, largely driven by U.S. sales of blood disorder drug Jakafi (up 17%) and royalties from Eli Lilly on immunology drug Olumiant (up 49%, benefiting from COVID-19-related usage). Management only slightly narrowed its guidance for U.S. Jakafi sales for 2022 to $2.33 billion-$2.4 billion (from $2.3 billion-$2.4 billion). We're encouraged with Incyte's progress building a dermatology business, extending growth for its hematology business, and investing in the early-stage oncology pipeline, which includes oral PD-L1 therapies as well as potentially differentiated combination regimens, like CD73 and adenosine therapies, that should have data later this year. We think the firm's portfolio and strategy continue to warrant a narrow moat, and shares look undervalued at recent prices.