Cavendish has reiterated its Buy rating on HUTCHMED with a 436p price target, arguing the Hong Kong-listed biopharma's recent share-price weakness has created a compelling entry point.
The broker views HUTCHMED, an emerging oncology-focused biopharma with more than $600m in annual revenue and $1.3bn in net cash, as clearly undervalued at current levels, with the balance sheet effectively capping downside risk.
Shares have fallen 19% over the past six months, dragged down by a quiet news period and an 18% decline in the Hong Kong Biotech index, but Cavendish argues the next six months should look materially different, with a Phase III data readout from the company's second global product and potential out-licensing of pipeline assets both expected to act as rerating catalysts.
The broker flags that HUTCHMED is operating around cash flow breakeven, and sees the stock as a likely beneficiary as investor interest in biotech recovers, with the Phase III readout the single proof point the market should watch.
