Ipsen Earnings: Robust Sales Growth Driven by Dysport and Cabometyx; Shares Moderately Undervalued

Ipsen IPN reported strong first-quarter results highlighted by total revenue of nearly $741 million, representing about 8% growth from the prior-year period. Strong revenue contributions from Dysport and Cabometyx helped drive the company’s growth during the quarter as their sales increased 30.5% and nearly 32% year over year, respectively. We maintain our fair value estimate of EUR 120 per share and view the stock as moderately undervalued, currently trading at a 9% discount to our fair value estimate. We maintain Ipsen’s narrow economic moat rating, which is based on its strong intangible assets, medium uncertainty rating, and negative moat trend.

We forecast Ipsen will achieve total sales growth in the midsingle digits in 2023 as strong performance from the company’s growth platforms (Dysport, Decapeptyl, Cabometyx, and Onivyde) will help offset declining sales from Ipsen’s leading product, Somatuline, which comprised 40% of total sales in 2022.

Cabometyx’s robust performance reflected strong volume uptakes in renal cell carcinoma across most geographies as a second-line monotherapy and as a first-line therapy in combination with nivolumab in more countries. Dysport’s performance was driven by further growth in the aesthetics market and strong demand in most therapeutics markets.

Our negative moat trend is based on declines in economic profits for Somatuline, which has seen its sales erode due to increased competition and adverse pricing from generics. We believe growth from Ipsen’s other marketed products, which have patents that extend until the early to mid-2030s, should somewhat offset the negative impact from generic entry. Additionally, Ipsen’s strong cash flows should allow the company to be well positioned to fund the development of pipeline candidates through external innovation opportunities and R&D efforts over the next decade.