Stifel reiterates Kamada stock Buy rating on biosimilar expansion

Stifel has reaffirmed its Buy rating and $11.00 price target on Kamada Ltd. (NASDAQ:KMDA) after the company announced the launch of two new biosimilar products. The target price represents a potential 38% increase from the current stock price of $7.96. However, shares of Kamada have slipped almost 8% over the past week. The newly launched biosimilars, Ustekinumab-Kamada and Enoxaparin-Kamada, expand the company's biosimilar portfolio to four products, alongside existing ones Bevacizumab-Kamada and Pegfilgrastim-Kamada.

Kamada plans to launch at least two more biosimilars in 2027, with the biosimilar business projected to generate $4 million in annual sales by 2026, and $10 million to $25 million by 2030. The company's financial health is rated as "GREAT" with a strong current ratio of 4.06. Stifel believes the biosimilar expansion will lead to incremental revenue growth and diversify the product portfolio with comparatively lower development and regulatory requirements.

The firm also notes that biosimilars are expected to generate higher gross margins, with Distribution segment margins anticipated to rise from the high-teens percentage range to 20% to 25%. Kamada recently secured a significant three-year plasma supply agreement, expected to generate around $50 million in revenue, with plasma sourced from new collection centers in Texas.

This agreement comes after Kamada confirmed sufficient supply of its anti-rabies immunoglobulin treatment to meet increased demand. Kamada also presented study results showing improved clinical outcomes for lung transplant recipients receiving its CYTOGAM product. These developments demonstrate Kamada's ongoing efforts to expand its product offerings and secure strategic agreements.