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Analysts’ Recommendations for Ligand Pharmaceuticals and Peers in 2017

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Financial performance in 2Q17

In 2Q17, Ligand Pharmaceuticals (LGND) reported revenues of ~$28.0 million, which represents solid year-over-year (or YoY) growth of ~43.4%. The company received royalties of ~$14.2 million in 2Q17, a YoY rise of 45.7%.

In 2Q17, Promacta, Kyprolis, and EVOMELA demonstrated robust revenue performance, which implied higher revenues for Ligand Pharmaceuticals under the tiered royalty structure.

In 2Q17, Captisol material sales also reached ~$5.6 million, representing YoY growth of ~42.8%. The company also earned around $8.2 million from license fees, milestone payments, and other revenue sources in 2Q17, which is significantly higher than the $5.9 million earned from these sources in 2Q16.

Ligand Pharmaceuticals has adopted a multi-pronged strategy focusing on research and development (or R&D), business development, and financial discipline. The company discovers investigational drugs through its early-stage R&D programs and then patents them.

Ligand Pharmaceuticals licenses these developments and data to other companies in return for one-time payments, royalties on future sales, and milestone payments. The company is also involved in buying assets from other companies to strengthen its technology offerings.

The company’s business model has also benefited from a lean cost structure and low share count, which can result in higher earnings per share for Ligand Pharmaceuticals’ investors. Ligand Pharmaceuticals makes up about 0.35% of the iShares Core S&P Small-Cap ETF (IJR).

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Analysts’ recommendations for Ligand Pharmaceuticals

Of the five analysts covering Ligand Pharmaceuticals in August 2017, one rated the stock a “strong buy,” three rated it a “buy,” and one rated it a “hold.”

Of the 17 analysts covering Jazz Pharmaceuticals (JAZZ) in August 2017, ~88% rated the company a “buy.” Approximately 47.6% of the 21 analysts covering AbbVie (ABBV) gave it a “buy” recommendation, while 81.5% of the 27 analysts tracking Celgene (CELG) rated it a “buy.”

In the next part, we’ll look at Ligand Pharmaceuticals’ revenue growth prospects.

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