Halozyme Therapeutics' (HALO) current royalty portfolio is expected to peak in 2029 as scheduled royalty rate step-downs take effect, and the next phase of value creation depends on offsetting these declines through its Hypercon platform, a new antibody-drug conjugate opportunity, and the next wave of Enhanze launches, Morgan Stanley said in a note emailed Wednesday.
Morgan Stanley said management's strategy appears credible, but it would incorporate the potential upside more fully into its valuation as Hypercon enters the clinic and antibody-drug conjugates reach proof of concept.
The brokerage expects a 15% probability of success for Hypercon, or approximately $146 million of risk-adjusted 2035 estimated royalties against management's $1 billion target, and it does not include ADC royalties or Aerocon, according to the note.
The company raised its 2026 revenue guidance to $1.86 billion to $1.925 billion and its non-GAAP EPS forecast to $8.75 to $9.05. The firm revised its 2026, 2027, 2028 non-GAAP EPS estimate to $8.91, $11.28 and $11.56 from $8.76, $10.55 and $11.70, respectively.
Morgan Stanley downgraded Halozyme Therapeutics to equal weight from overweight citing valuation and raised its price target to $109 from $105.
Price: 101.24, Change: -1.74, Percent Change: -1.69
