Incyte Earnings: Maintaining Our $88 Fair Value Estimate as Shares Remain Significantly Undervalued

Incyte’s total revenue grew 12% in the third quarter, driven by hematology drug Jakafi and topical autoimmune disease drug Opzelura. Management largely maintained its guidance for the full year, only slightly narrowing Jakafi U.S. sales guidance to a range of $2.59 billion-$2.62 billion. We maintain our $88 per share fair value estimate, and shares look undervalued, as we think the market is failing to recognize potential in Incyte’s pipeline. Incyte ended the quarter with $3.5 billion in cash, which it could also use to supplement its portfolio with bolt-on acquisitions as the Jakafi patent expiration in 2028 starts to enter the radar of investors. We think the firm’s Jakafi franchise as well as new launches like Opzelura secure Incyte a narrow moat.