Incyte Earnings: Maintaining Our $88 Fair Value Estimate Following In-Line First Quarter

Incyte’s first-quarter results put the firm on track to meet our expectations for the full year, and we’re not making any changes to our $88 fair value estimate. While sales of hematology drug Jakafi in the US fell 1% to $572 million, this was due to do a $55 million inventory reduction, and demand growth remains on track in the midsingle digits. Sales of dermatology drug Opzelura grew to $86 million as atopic dermatitis and vitiligo launches continue in the US and begin in Europe, which helped support Incyte’s overall top-line growth of 9% in the quarter. We think the market underappreciates Incyte’s potential to both refresh its hematology portfolio with new targeted therapies and combination regimens and also build a successful dermatology business with Opzelura and pipeline drugs like povorcitinib and new oral drug candidates from the pending acquisition of Escient Pharmaceuticals. We think Incyte’s strong foundation with Jakafi and Opzelura as well as a growing late-stage pipeline support its narrow moat.