UCB stock rating upgraded to Buy at BofA on Bimzelx growth potential

BofA Securities upgraded UCB SA to Buy and raised its price target to EUR225.00, driven by strong growth prospects for its Bimzelx treatment, with U.S. prescription rates tracking 3-4 times higher year-over-year and revised sales estimates 10-15% above consensus for FY25-28. Despite UCB's recent underperformance due to tariff/MFN risks and Bimzelx pricing uncertainty, BofA increased EPS estimates by 2-16% and anticipates catalysts in H2 2024, including potential risk relief and favorable competitor data. The firm justifies its 23x P/E target, a 40% premium to the sector, by Bimzelx's unique position as a growth asset expected to drive a 20% EPS compound annual growth rate from 2026-2029.

Analysis

BofA Securities has upgraded UCB SA to Buy from Neutral, increasing its price target to EUR225.00 from EUR210.00, signaling a strong conviction in the company's growth trajectory. The primary driver for this upgrade is the robust performance of UCB's key drug, Bimzelx, whose U.S. prescription rate for fiscal year 2025 is currently tracking at three to four times the rate of fiscal year 2024. Consequently, BofA's sales estimates for Bimzelx for the FY25-28 period are now 10-15% above consensus, prompting a 2-16% increase in the firm's earnings per share estimates for UCB. This positive outlook contrasts with the stock's recent underperformance, which has been attributed to its exposure to tariff and Most Favored Nation (MFN) pricing risks, alongside uncertainty surrounding Bimzelx price concessions. BofA justifies its premium valuation—a target 2026 P/E of 23x, representing a 40% premium to the sector multiple—by citing Bimzelx as a unique growth asset projected to deliver a 20% EPS compound annual growth rate from 2026 to 2029. Potential near-term catalysts in the second half of the year include possible relief from MFN risks and competitor data from Moonlake that is expected to be undifferentiated, further solidifying Bimzelx's market position.

Key Decisions for Investors

• Investors should consider the BofA upgrade a significant positive signal, supported by quantifiable momentum in Bimzelx prescriptions and a projected 20% EPS CAGR, suggesting the recent stock underperformance may present a buying opportunity.
• It is crucial to monitor upcoming developments related to U.S. tariff and Most Favored Nation (MFN) pricing policies, as any favorable resolution could serve as a major catalyst and alleviate the primary overhang on the stock.
• Keep a close watch on competitor Moonlake's upcoming Sonelokimab data and UCB's first-half 2025 results, as confirmation of Bimzelx's superior or differentiated profile and clarity on its pricing will be key to de-risking the investment thesis and supporting the premium valuation.