With 49% Upside Potential, BioMarin (BMRN) Added to Goldman Sachs Conviction Buy List

(Updated - March 7, 2016 8:40 AM EST)

Goldman Sachs upgraded BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) from Buy to Conviction Buy with a price target of $129, suggesting upside of 49%. Analyst Salveen Richter thinks pipeline catalysts will drive value in 2016.

"Our CL-Buy is driven by (1) valuation support from the base business of 5 approved drugs ($65/share; GSe $2bn in 2026 peak sales), (2) upside from the 7-product pipeline (GSe $2.7bn in peak sales for 4/7 drugs), (3) 2016 catalysts to drive value and (4) attractive M&A profile (ranked 1 under GS framework, implying 30-50% probability of M&A activity)," said Richter. "BMRN guided to non-GAAP EPS breakeven or better in 2017 (excl. Kyndrisa), showing opex restraint and a commitment to profitability – reflecting a bullish view of the base business and 2017 launches (cerliponase alfa and pegvaliase)."

Discussing pipeline catalysts, the analyst said, "(1) pegvaliase pivotal data in PKU in March, (2) the R&D day (April 20) featuring BMN 270 gene therapy in hemophilia A (not in our model) and 1-year BMN 111 data in achondroplasia, (3) an E.U. CHMP opinion on Kyndrisa in DMD (expected to be negative post U.S. decision, not in our model) in 2Q – and in 2017, look to two product launches (GSe of $1.3bn vs. guidance of ~$1.5bn in peak sales) and non-GAAP profitability."

The analyst added, "We believe pegvaliase data will be positive given the Phase III feeder study data (~80% of patients responded to therapy, mean Phe reduction of ~70%); if neurocognitive benefit is observed it will aid to accelerate commercial uptake. At the R&D day, we focus on gene therapy in hemophilia A (BMN 270), with data from the first 5 patient (3 treated at the third dose) to serve as early proof-of-concept and 1-year vosoritide data in achondroplasia (ranked 3 in our pipeline analysis within)."

For an analyst ratings summary and ratings history on BioMarin Pharmaceutical Inc. click here. For more ratings news on BioMarin Pharmaceutical Inc. click here.

Shares of BioMarin Pharmaceutical Inc. closed at $86.67 yesterday.

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