Halozyme downgraded at Morgan Stanley on valuation

Morgan Stanley has lowered its rating on Halozyme Therapeutics (NASDAQ: HALO) stock, downgrading it from Overweight to Equalweight and increasing the price target to $109 from $105. The analyst, Sean Laaman, explained that Halozyme's royalty base is becoming more diversified, and its European intellectual property position has strengthened significantly in October.

The $109 valuation is based on the current royalty portfolio, with peak values expected in 2029 due to scheduled royalty-rate step-downs. The firm believes that Halozyme's growth can continue beyond these step-downs through Hypercon, a new antibody-drug conjugate opportunity and upcoming ENHANZE launches. Morgan Stanley plans to incorporate these prospects more fully into their valuation as Hypercon progresses through clinical trials and antibody-drug conjugates gain proof of concept.

Halozyme's shares have increased by 53% year-to-date, outperforming the Nasdaq Biotechnology Index's 31% gain. Despite a recent 21% drop over the past week, the stock is currently trading close to Morgan Stanley's base case value. Halozyme maintains a strong free cash flow yield of 8% and a high financial health score. For investors seeking further insight, the company provides a comprehensive Pro Research Report on HALO, one of more than 1,400 available for US equities.