Morgan Stanley analyst Terence Flynn maintained a Buy rating on Royalty Pharma (RPRX – Research Report) yesterday and set a price target of $51.00.
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Terence Flynn has given his Buy rating due to a combination of factors surrounding Royalty Pharma’s strategic financial agreements and promising drug developments. The company has entered into a significant funding agreement with Revolution Medicines, which includes a substantial investment for a synthetic royalty stake in the promising drug daraxonrasib, a RAS inhibitor currently in Phase 3 trials. This agreement not only provides Royalty Pharma with potential future revenue streams from the drug’s sales but also includes a senior secured loan component, enhancing their financial flexibility.
Daraxonrasib has shown encouraging results in clinical trials, particularly for RAS mutant pancreatic cancer and non-small cell lung cancer, with the FDA granting it Breakthrough Therapy Designation. The drug’s potential market impact is significant, with projected sales reaching billions by 2030. Additionally, the structured royalty terms are designed to capture substantial value early in the drug’s commercial lifecycle, providing a robust return on investment. These strategic moves and the promising clinical data underpin Flynn’s confidence in Royalty Pharma’s growth prospects, justifying the Buy rating.
In another report released yesterday, Bank of America Securities also maintained a Buy rating on the stock with a $42.00 price target.