Legend Biotech(US:LEGN)2024-08-12 09:03Investment Rating - The report maintains a "Buy" rating for Legend Biotech (LEGN US) with a target price raised to $76.00, indicating a potential upside of 33.5% from the current price of $56.91 [1][5]. Core Insights - The second quarter of 2024 (2Q24) performance exceeded expectations, leading to an upward revision of the company's financial forecasts and target price. The total revenue for 2Q24 increased by 154% year-over-year to $187 million, with product and licensing revenues of $93 million and $91 million, respectively. The gross margin for product manufacturing surpassed 50% for the first time, reaching 51.4% [1][2]. - The company is expected to achieve breakeven by 2026, with revised revenue and net profit forecasts for 2024 set at $630 million and a net loss of $264 million, respectively [1][2][6]. - Sales momentum for Carvykti is strong, with 2Q24 sales growing by 60% year-over-year and 18% quarter-over-quarter to $186 million. The number of hospitals offering Carvykti treatment in the U.S. has increased to 77, with expectations to reach approximately 100 by year-end [1][2]. Financial Forecast Summary - Revenue projections for Legend Biotech have been adjusted as follows: - 2024E: $630 million (previously $600 million, +5.0%) - 2025E: $1,051 million (unchanged) - 2026E: $1,382 million (unchanged) [2][6]. - Gross profit estimates have also been revised: - 2024E: $360 million (previously $336 million, +7.3%) - 2025E: $604 million (previously $576 million, +5.0%) - 2026E: $849 million (unchanged) [2][6]. - The gross margin is expected to improve to 48.0% in 2024, 53.0% in 2025, and 60.0% in 2026 [2][6]. Valuation Model - The discounted cash flow (DCF) model indicates a present value of free cash flow at $2,837 million and a terminal value present value of $9,637 million, leading to an enterprise value of $12,475 million. After accounting for net cash of $1,379 million, the equity value is estimated at $13,853 million, resulting in a per-share value of $76.00 [4][6].