Celltrion price target raised to 270,000 won as new product growth continues

[Financial News] Celltrion has reported results that beat market expectations, driven by growth in its new products, prompting analysts to raise their expectations for the company.
iM Securities raised its target price for Celltrion from 260,000 won to 270,000 won. The increase reflects higher earnings estimates based on rapid growth in the new product portfolio and solid performance from existing products.
On the 28th, iM Securities maintained its ‘Buy’ rating on Celltrion and raised its target price to 270,000 won. Compared with the previous day’s closing price of 188,600 won, this represents upside potential of 43.2%.
The expansion of sales from the new product portfolio is translating into improved profitability. Commercialization results in the U.S. market and progress in the follow-on pipeline were also cited as medium- to long-term growth drivers.
Earnings also underpin the higher target price. Celltrion’s consolidated third-quarter revenue rose 53% year over year to 1.5755 trillion won, while operating profit increased 74% to 525.3 billion won. Both revenue and operating profit exceeded market consensus of 1.4506 trillion won and 509.6 billion won, respectively. The operating margin was 33.3%.
The new product portfolio is at the center of the growth. While sales from the existing product portfolio rose just 3% year over year, sales from the new portfolio climbed 74%, surpassing 900 billion won for the quarter.
As a growing share of revenue comes from new products, profitability is improving. In light of this trend, iM Securities said the company is building a foundation for stable earnings growth over the medium to long term.
The company’s performance in the U.S. market is also drawing attention. The new biosimilar Omlyclo launched in the U.S. in October, following its launch in Europe, securing first-mover status.
At the time of launch, Celltrion signed an exclusive supply agreement with a large U.S. healthcare company, and a pharmacy benefit manager (PBM) selected Omlyclo as a preferred drug over the originator product. Given its performance in Europe, iM Securities expects Omlyclo to gain a foothold in the U.S. market quickly as well.
Zymfentra’s third-quarter sales declined from the previous quarter, but analysts say it is difficult to conclude that this reflects weakening prescription demand. The decline was attributed to temporary effects from U.S. government rebates and settlements with insurers and PBMs. Preparations for collaboration with Pfizer Inc. are also mostly complete, and joint sales and marketing efforts could provide an additional growth driver once they ramp up.
However, not all revenue growth translates into profit. Contract manufacturing (CMO) revenue from Eli Lilly and Company contributes to top-line growth but not to operating profit, and was identified as a factor weighing on profitability.
Non-operating losses included a substantial unrealized foreign exchange translation loss incurred when foreign-currency receivables were converted into won. Since this was a valuation loss rather than a realized loss, it should be considered separately from operating performance.
iM Securities forecast Celltrion’s revenue and operating profit for this year at 5.7562 trillion won and 1.8568 trillion won, respectively. These figures represent year-over-year increases of 38.3% in revenue and 58.9% in operating profit.
The estimates reflect growing preference for biosimilars in global markets, continued market penetration by new products, and stronger-than-expected performance from existing products.
Jeong Jae-won, an analyst at iM Securities, said earnings estimates had been raised to reflect growth in new products and solid performance from existing products. Jeong also cited as positive factors the diversification of modalities in the new drug pipeline beyond biosimilars and the schedule of key events, including the release of related data, for the first half of next year.

[email protected] Kang Jung-mo Reporter