Lowering Our Incyte FVE to $88 on Weaker Monjuvi Prospects, Despite Steady Jakafi Growth

Incyte’s product revenue grew 18% in 2022, driven largely by steady double-digit growth of the firm’s core hematology drug Jakafi (up 13%). Management guidance for 2023 U.S. Jakafi sales of $2.53 billion-$2.63 billion looks in line with our own estimates, despite the incorporation of a new competitive threat in myelofibrosis, and the launch of topical treatment Opzelura in atopic dermatitis and vitiligo appears to be accelerating, with supply issues resolved and discounts falling to more sustainable levels. We’re concerned about the growth trajectory of other products in Incyte’s portfolio, and we’re lowering our fair value estimate to $88 from $105. We think shares look relatively fairly valued at recent prices, and that the firm’s Jakafi and growing dermatology business continue to support a narrow moat.