Swiss investment bank Credit Suisse has raised its Lundbeck recommendation from ”underperform” to ”neutral,” while stating in an analysis that certain concerns have been accounted for in the company’s stock price.

”We now see that concerns about [Lundbeck’s] ability to reach its margin goal and about the oral CGRP treatment competition for Vyepti have been included in the stock price,” the analysis states.

Credit Suisse calculates that Lundbeck stock is trading 7.4 times over estimated 2023 earnings, which is a discount of more than 60% compared to the pharmaceutical industry average.

The investment bank lowers its Lundbeck share price target from DKK 32.6 to DKK 31 (USD 4.4 to USD 4.2), explaining that it sees in the long term around 3% lower earnings per share due to reduced potential top sales of Rexulti in the Alzheimer’s agitation indication.

Credit Suisse also thinks there are some unanswered questions about Rexulti in this indication after data was presented at the Alzheimer’s Association International Conference, but points out that a statistical advantage and lack of approved products could still lead to a authorization nod from authorities.

Rexulti now has a 80% chance of reaching top sales of USD 700m based on market penetration of around 3.5%, the bank says. This is an adjustment down from former projected top sales of USD 1bn.

As for Lundbeck’s financial expectations, Credit Suisse thinks the pharmaceutical firm’s operating margin (EBIT) outlook of more than 30% is too ambitious, instead predicting 28.9%.

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