Nomura Upgrades Pharmacyclics, Sees 'Upside' To Stock

Nomura upgraded Pharmacyclics, Inc. (NASDAQ: PCYC) Thursday from Neutral to Buy and raised it price target from $195 to $196.

Analyst M. Ian Somaiya noted that the company reaffirmed its U.S. sales guidance of $1 billion on Wednesday and confirmed the analyst’s expectations for “off-label usage of Imbruvica in 1st line CLL following RESONATE-2 data release in 3Q15.”

Somaiya believed that “rapid adoption in first-line CLL could support upside to 2015 guidance.” Furthermore, the analyst felt that the DAWN Phase II trial in 2H15 could lead to "a $1 billion opportunity in refractory follicular lymphoma.”

The expansion of label opportunities driven by European launches, potential upside in the U.S. and positive clinical data were seen as supports for the rating upgrade.

Somaiya concluded that “principal near-term risk to PCYC remains a soft 1Q as Medicare donut hole, higher discount and fewer selling days dampen Imbruvica growth.”

The price target was rasied based on improved sales of Imbruvica in Europe.

The firm estimated FY 2015 EPS at $0.46 and FY 2016 EPS at $3.14.

Pharmacyclics recently traded at $167.90, down 1.36 percent.