Why Cantor's Mara Goldstein Just Downgraded ImmunoGen

In a report published Monday, Cantor Fitzgerald analyst Mara Goldstein downgraded the rating on

from Buy to Hold, while raising the price target from $12 to $21. The analyst said that the downgrade was a result of the valuation gap narrowing. Analyst Mara Goldstein said that the price target had been raised since the company's shares had moved past the prior target. "Our new PT incorporates higher value for IMGN853, which is advancing into Phase II, though the trial will be constructed in such a way that could possibly support NDA filing." While there is the possibility of "an accelerated commercial program," the current valuation of ImmunoGen's shares already reflects this, Goldstein wrote. In the report Cantor Fitzgerald noted, "We have liked the shares believing that the clinical assets - namely IMGN853 - were discounted relative to its likelihood of advancement. This was our view heading into ASCO and with the strong run-up in the shares, IMGN853 has closed the valuation gap. We do think that improved visibility for IMGN853 and the rest of the pipeline, can support incremental valuation expansion, but for greater upside, we believe more advanced data is needed." The company reported its F4Q15 EPS at ($0.35), better than the Cantor estimate of ($0.39). The beat was driven primarily by higher revenue. There was a non-cash royalty revenue line of $5.5 million, including the sale of Kadcyla royalties. Total operating expenses came in at about $38 million, higher than the Cantor estimate of $35 million. "We think there is incremental upside to be had from the pipeline, but major inflection points are not likely, in our view, before 2H:CY16," Goldstein said.