Cantor Upgrades Seattle Genetics To Buy, Firm Says Guidance Is Conservative

On Tuesday, Seattle Genetics, Inc. SGEN released its most recent earnings report, followed by the company's earnings call.

Revenues came in up 25.8 percent at $93.5 million, R&D expense up 16.6 percent at $74.6 million and SG&A up 14.3 percent at $33.6 million. However, operating loss came in up 9.4 percent at $25.1 million, the net loss was up 6.7 percent at $24.9 million and the loss/share was up 18.2 percent at $0.18.

During the conference call, Chairman, President and CEO Clay B. Siegall emphasized the company's success: "2015 was a year of significant progress and strong execution for Seattle Genetics."

Since the conference call, Seattle Genetics has fallen 8.26 percent to $26.64 Wednesday morning.

On Wednesday, Cantor Fitzgerald released a company update on Seattle Genetics, upgrading the stock to Buy with a $38 price target.

Related Link: Barclays: Buy Seattle Genetics' Overlooked Pipeline, Stock Has 57% Upside

According to the firm, "We are upgrading shares of Seattle Genetics on the premise that the below-consensus guidance for ADCETRIS [a ‘monoclonal antibody drug conjugate treatment for CD30+ cancers'] is likely too conservative, and with moderate expectations and the current valuation, the shares could have an opportunity to move off of what looks like the bottom end of a trading range."

The firm reiterated that the guidance given by Seattle Genetics was, in the analysts' view, conservative and therefore provides "wiggle room."

"Further," Cantor Fitzgerald explained, "with a solid cash position ($700+ million) and limited clinical risk, we think it is well-positioned in a volatile market. We are therefore upgrading to a Buy from a Hold while lowering our PT to $38 from $44 to reflect decreased multiples being ascribed to biotechnology companies in the current market."