Ipsen Earnings: Dysport & Cabometyx Drive Growth as Pipeline Develops; Shares Slightly Undervalued

Ipsen IPN reported solid third-quarter results highlighted by total revenue of EUR 772 million, representing 6.5% growth from the prior-year period at constant exchange rates. Strong sales from Dysport and Cabometyx helped drive the company’s growth during the quarter, as their sales increased 13.4% and nearly 21% year-over-year at constant exchange rates, respectively. We maintain our fair value estimate of EUR 120 per share and view the stock as slightly undervalued, currently trading at a 7% discount to our fair value estimate. We maintain Ipsen’s narrow economic moat rating, which is based on its strong intangible assets.

We forecast Ipsen will achieve total sales growth in the mid-single digits in 2023 as strong performance from the company’s growth platforms will help offset declining sales from Ipsen’s leading oncology product, Somatuline, which comprised 40% of total sales in 2022. Cabometyx’s sales were driven by strong volume uptakes across most geographies in second-line renal cell carcinoma and as a first-line therapy in combination with nivolumab. Dysport’s performance was largely driven by additional growth in aesthetics and solid demand in therapeutics.

We forecast declines in economic profits for Somatuline, which has continued to experience competition and adverse pricing from generics. Growth from Ipsen’s other marketed products and candidates that are continuing to develop in its pipeline should somewhat offset the negative impact from generic versions of Somatuline. During the quarter, Ipsen received approval from the U.S. Food and Drug Administration for Sohonos, the first and only treatment for people with fibrodysplasia ossificans progressiva, a rare genetic disorder that causes soft tissues to transform permanently into bone. Additionally, Ipsen’s healthy free cash flow should position the company to fund the development of pipeline candidates over the next decade.