Deutsche Bank downgraded Ligand Pharma (NASDAQ: LGND) from Hold to Sell with a price target of $110.00 (from $104.00). The downgrade was tied to valuation.

Analyst Gregg Gilbert said, "Our model and $110 target factor in continued growth for key royalty drivers (particularly AMGN’s Kyprolis and Novartis’ Promacta), growth in technology deals (tied to Captisol and other platforms), and launches of new partnered products in the future. We would acknowledge that the long-term upside potential of LGND’s >150 shots on goal is difficult to assess today, but over the next one year, we see the potential for downside in the shares from the current level if revenue momentum does not continue and/or if new pipeline “upsides” do not emerge, and are moving from a Hold to a Sell rating," said the analyst.

Gilbert added, "It is worth noting that one particularly high-profile opportunity, MRK’s BACE inhibitor, could create significant volatility when Phase III studies read out in mid-2017. Overall, we continue to like management’s focus on building value for the very long-term, while maintaining a tight leash on expenses nearer-term. This is simply a case in which we see the stock as ahead of itself when viewed through a one-year lens. When we were bullish on the stock upon our launch in Dec-2014, it appeared to us that the Street was not paying fully for the existing or future streams, and investors were generally unfamiliar with the LGND story."

For an analyst ratings summary and ratings history on Ligand Pharma click here. For more ratings news on Ligand Pharma click here.

Shares of Ligand Pharma closed at $132.41 yesterday.