UPDATE: Citigroup Downgrades Agios Pharmaceuticals to Neutral, Raises PT as Valuation is Stretched

In a report published Wednesday, Citigroup analyst Yaron Werber downgraded the rating on Agios Pharmaceuticals AGIO from Buy to Neutral, but raised the price target from $93.00 to $137.00. In the report, Citigroup noted, “We are raising our AGIO target price to $137 based on recent positive data and our model update following Celgene's in-licensing AG-120. But while we are constructive on AGIO's technology, mgt, and partnership with Celgene, the valuation does not leave ample room relative to our rating system. Hence, we are downgrading to Neutral/High Risk (2H) after a great run (+265% since late June). We see potential for upside to be driven by further positive data that could boost the chance for success, better clarity on treatment duration, pricing, and the pre-clinical pipeline. The key variable, in our view, is duration of therapy for both AG-221/AG- 120 in treatment naïve transplant ineligible AML patients, as post-transplant maintenance, and in rel/ref AML. We concede that generating this data is still 2+ years away. We expect approval in 2018 for rel/ref AML followed by 2019 for 1st line. But it is prudent to move to the sidelines given the uncertainties, in our view.” Agios Pharmaceuticals closed on Tuesday at $126.14.