UCB Upgraded by Jefferies as Stock Selloff Prices In Bimzelx Risks

Jefferies has upgraded Belgian biopharmaceutical company UCB to "Hold" from "Underperform," asserting that a significant selloff in the company's shares has created a more balanced risk-reward profile for investors. The bank also raised its price target on the stock to €220 from €212, citing that the market now adequately reflects the pricing headwinds facing UCB's key drug, Bimzelx.

Rationale for the Upgrade

The upgrade follows a de-rating of UCB's stock, which has fallen from a valuation of 20 times to 15 times projected 2027 earnings, according to the Jefferies note. This decline occurred after first-half results highlighted continued pricing pressure on Bimzelx. Jefferies now views the stock's valuation as offering a more balanced proposition for investors.

While total group revenue beat expectations in the first half, driven by strength in its epilepsy drug Briviact and immunology drug Cimzia, Jefferies noted that Bimzelx missed on an underlying basis. The bank also pointed out that an accrual adjustment contributed to an earnings beat, and that Bimzelx is expected to face further price reductions in the second half of the year.

Bimzelx Challenges and Outlook

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UCB reported that U.S. payer access for Bimzelx reached approximately 80% in the first half, a milestone Jefferies said was achieved through price concessions that are set to continue. Analysts observed that new-to-brand prescriptions for the psoriasis treatment remain "somewhat subdued," and that direct-to-consumer marketing efforts have not yet shown a significant impact.

Looking ahead, Jefferies raised its financial estimates for UCB, primarily due to the strong performance of Briviact:

• 2026 & 2027 Revenue: Estimates increased by 6% and 5%, respectively.
• 2026 & 2027 Adj. EBITDA: Estimates increased by 8% and 5%, respectively.

Despite the upgrade, Jefferies remains more cautious than the market on Bimzelx's long-term potential, modeling peak sales of €6.7 billion by 2031, which is below the consensus estimate of €7.7 billion. The primary downside risk for the stock, according to the note, is a wave of competitor drug readouts in the immunology space over the next 12 to 24 months.