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Morgan Stanley Upgrades Galderma, Citing Bullish Outlook for Nemluvio Drug
Morgan Stanley upgraded Galderma Group AG to “overweight” from “equal-weight” on Thursday, raising its price target on the Swiss dermatology company to 210 Swiss francs from 160. The new target implies a 19% upside from the stock's closing price on July 29.
Rationale for the Upgrade
The upgrade follows Galderma's strong first-half 2026 results, which prompted the investment bank to increase its growth forecasts. In a note to clients, Morgan Stanley analysts stated that Galderma "has consistently outperformed expectations in all parts of the business since the IPO" and that recent performance shows "no signs of deceleration or softness."
The bank had previously held a more cautious "equal-weight" rating due to potential risks from macroeconomic factors on the company's beauty and skincare segments.
Nemluvio Sales Forecast Raised
The primary driver for the more optimistic view is the outlook for Nemluvio, a biologic drug for serious dermatological conditions. Morgan Stanley now projects peak sales for the drug could reach $5.1 billion, significantly above the current consensus estimate of $4.2 billion.
AdThis revised outlook led the bank to increase its 2027-2030 financial forecasts for Galderma, lifting revenue estimates by 5-6% and earnings per share (EPS) estimates by 9-11%. Analysts also pointed to management’s expectation for Nemluvio to generate over $1 billion in sales in 2026.
Valuation and Outlook
Morgan Stanley acknowledged that Galderma's valuation appears high, trading at 24 times its projected 2027 EV/EBITDA. However, analysts called the valuation "expensive but reasonable" given the company's strong growth trajectory, projecting a compound annual growth rate (CAGR) from 2027 to 2030 of 12% for sales and 21% for EPS.
The bank sees a potential for Galderma to raise its full-year sales guidance during its third-quarter results. Reflecting this confidence, Morgan Stanley also raised its bull-case price target to 250 Swiss francs and its bear-case target to 150 Swiss francs.
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