Argus raised its price target on shares of Incyte Corporation (NASDAQ: INCY), premising the positive opinion on a trio of factors.

The firm noted that the company reported better than expected second quarter sales and earnings per share and also hiked its guidance for Jakafi sales in 2016. Additionally, the firm believes the company could be a takeover target, probably for Gilead Sciences, Inc.(NASDAQ: GILD), which is seeking to boost its oncology pipeline.

Value Opportunity

Argus sees the below-peer group average of 18.2 for the company as presenting a value opportunity based on its prospects for above-average sales growth. The firm's view of further appreciation scope is due to the company's promising pipeline and the growth trajectory for Jakafi, despite the recent clinical setbacks.

Jakafi is the first and only drug approved for the treatment for myelofibrosis, a rare blood cancer. It has also been approved by the FDA for the treatment of polycythemia vera, another blood cancer

Seeking Inorganic Growth

Argus noted Incyte's recently closed acquisition of the European operations of oncology company Ariad Pharmaceuticals, Inc.'s (NASDAQ: ARIA) European operations for $140 million, plus tiered royalties from sales of its drug Iclusig to treat leukemia, helps it to diversify from Jakafi.

Raising Estimates

Argus raised its 2016 earnings per share estimate to $0.45 from $0.32 and that for 2017 to $1.33 from $1.31. The firm maintains its 2016 revenue forecast at $1 billion but raised its 2017 forecast to $1.4 billion from $1.3 billion.

The firm noted that its new price target of $98, up from $92, implies 16.1 times its 2016 sales per share estimate. The rating was maintained at Buy.

Latest Ratings for INCY

View More Analyst Ratings for INCY
View the Latest Analyst Ratings

See more from Benzinga

• Fidelity National Information's Share Performance Faltering Slightly Since Q2 Release

• Formula One Deal Could Be A Game Changer For Liberty Media

• How To Value Stocks Using The Capital Asset Pricing Model

© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.