Stifel downgraded Vanda Pharmaceuticals (NASDAQ:VNDA) to “hold” from “buy” and cut its price target to $17 from $26 after a deeper look into a FDA lawsuit against the company, its pipeline and execution risk. The stock closed at $13.19 on July 24.
“Based on our recent diligence, we were overly bullish on thinking Vanda’s pipeline was more de-risked than it really was, and we see the company as highly levered to a base business with limited growth potential,” writes analyst Derek Archila.
“After a more critical look at tradipitant’s clinical data and information disclosed from the FDA lawsuit, we believe there is greater clinical, safety, and timing risk around this program than we previously thought,” he added.
For the stock, “we believe there are more downside risks than upside opportunities over the next 12 months and don’t necessarily view a potential near-term resolution of the FDA lawsuit (win or lose) as a meaningful positive catalyst, given our new found questions about tradipitant’s safety for chronic diseases.” Mr. Archila said.
