J.P. Morgan Upgrades Rating, Raises PT To $45 On ITMN

J.P. Morgan is upgrading its rating from Neutral to Overweight and is raising its price target from $38 to $45 on InterMune

as the stock shifts back to fundamentals. According to J.P. Morgan, “ITMN shares have defined SMid cap biotech volatility over the past year driven by US and EU regulatory events; the stock is down ~35% since mid-April surrounding liquidation of a position by a large shareholder. Going forward, the focus should shift from scarcity value back to fundamentals with Esbriet launching in idiopathic pulmonary fibrosis (

) in Europe this fall. Based on our analysis of the market and several discussions with pulmonologists, we think that Esbriet will have a meaningful place in the IPF paradigm. Using very conservative forecasts for Esbriet in the EU (we've lowered near term estimates; see Table 3) and 50% probability-adjusted value for US Esbriet, we arrive at a sum-of-the parts NPV in the mid-$40s. Hence, we now find valuation much more compelling and are upgrading ITMN shares to Overweight from Neutral and have raised our target to $45 (Dec 12; +37% upside from current levels), up from $38 (Dec 11).” ITMN closed at $32.87 yesterday.