Telix shares fall as Morningstar calls market 'too optimistic' on Illuccix sales
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The news: Shares in Telix Pharmaceuticals dipped on the ASX as Morningstar analysts said the market was "too optimistic" on the sales growth of the biopharmaceutical company's prostate cancer diagnostic agent Illuccix.
The numbers: Telix shares fell 2% to $21.53 by 1:05pm AEDT. Morningstar said the shares were overvalued against its unchanged $17 fair value estimate.
The context: Morningstar's analysts flagged that nearly all Telix's revenue was due to Illuccix, with 97% of Q3 group sales attributable to Illuccix in the US alone.
They estimate that average selling prices of Illuccix will decrease by 15% when the transitional pass-through payment status it received for being a new and innovative technology expires in June 2025.
Morningstar also increased its earnings-per-share forecasts by 3% over the next 10 years, consistent with Telix's guidance for accretion following its acquisition of US radiopharmacy network RLS last month. However, Morningstar said that the positive impact on the valuation was offset by the price paid, with analysts viewing the acquisition as "value neutral" overall.
Telix, which filed to list American Depository Shares on the Nasdaq this week, has seen its share price rise more than 150% over the last 12 months.
What they said: "We suspect the market is too optimistic on the growth of Illuccix's commercial sales, which contribute over 85% of our fair value estimate," Morningstar's analysts said.
"... The market is also overly excited about potential new earnings streams from Telix's product pipeline that remain commercial unproven in an increasingly competitive market."
The source: Morningstar research
