Vertex pays nearly $10B for Crinetics to enter endocrinology
ResMed’s decision to sell its MatrixCare division for $490 million drew split analyst reactions Tuesday. Morgans analyst Derek Jellinek described the divestment as a move that sharpens the breath-tech company’s strategic focus by exiting the “somewhat peripheral vertical of aged care” and increasing its exposure to core franchises including sleep devices and masks. The sale monetizes a mature asset and funds shareholder returns that should help support ResMed’s share price, Jellinek wrote in a note. Morgans rates the company’s Australia-listed stock a buy with a target price of 41.72 Australian dollars. ResMed’s ASX-listed shares were down 0.3% at A$31.345.
RBC analyst Craig Wong-Pan offered a more skeptical read. Wong-Pan said the 8.9-times earnings multiple on the sale came in below his expectations. He had anticipated a multiple in the low double digits to mid-teens, though he noted he did not expect a match to the roughly 25-times earnings ResMed paid when it acquired MatrixCare in 2018. “We wonder if ResMed’s decision to sell at this multiple partly reflects possible risks of future AI disruption to its software business,” Wong-Pan wrote. RBC has an outperform rating and a $321 target price on ResMed’s U.S.-listed stock. Its ASX shares were down 0.5% at A$31.29.
Vertex Pharmaceuticals’ roughly $10 billion purchase of Crinetics Pharmaceuticals was described as strategically sound by Evercore analysts in a research note. The deal marks Vertex’s entry into endocrinology, its fifth therapeutic area. Evercore said the acquisition shows Vertex continuing to diversify its portfolio. “If these assets ultimately generate anything close to Vertex’s proposed $5B+ peak sales, then this is an easy win,” they wrote. “Having said that, we don’t believe that the deal needs to hit $5B+ in peak sales to be a success.” Vertex shares were roughly flat in premarket trading Tuesday, while Crinetics shares doubled.
Eli Lilly drew bullish commentary from JPMorgan analysts ahead of its quarterly report. The analysts said Lilly is poised for another set of strong results and could again raise its full-year sales and earnings targets. They cited the continued ramp of the diabetes drug Mounjaro internationally and healthy growth in the U.S. obesity market. They also noted potential upside from the uptake of Zepbound under Medicare, which began July 1. “More broadly on the story, LLY remains our top pick with further upside to Street numbers over the next several years,” especially outside the U.S., the analysts said, adding that they expect a series of upcoming catalysts they believe will extend Lilly’s leadership in the $200 billion-plus incretin market.