Telix Pharmaceuticals Ltd (ASX: TLX) has experienced a significant downturn over the past year, with its share price plummeting by 65%. While this performance might deter some investors, one prominent brokerage firm, Bell Potter, sees this as a potential golden opportunity.
Bell Potter’s Bullish Outlook on Telix Pharmaceuticals
Bell Potter has recently reviewed Telix Pharmaceuticals’ half-year results, which indicated a dip in earnings. The company reported:
- Revenue Growth: A substantial 56% increase in revenue, with 20% of that stemming from organic growth in its Precision Medicine segment.
- EBITDA Decline: Group Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) saw a 41% decrease, settling at $39.5 million.
- Statutory Loss: The company posted a statutory loss of $7.1 million.
- Adjusted Net Profit After Tax (NPAT): Excluding non-cash revaluation charges within finance costs, the adjusted NPAT stood at approximately $19.6 million.
Despite the short-term earnings dip, Bell Potter’s optimism is rooted in Telix’s robust development pipeline. The firm anticipates that the company will remain heavily focused on advancing its pipeline through at least FY27/FY28. Key priorities include the development of therapy assets across several ongoing clinical trials:
Key Pipeline Developments
- Prostate Cancer Trials: Multiple trials are underway, targeting advanced prostate cancer.
- Glioma Trials: Research is progressing in the treatment of glioma.
- Renal Trials: Investigations into renal cancer therapies are ongoing.
- Metastatic Bone Trials: The company is actively pursuing treatments for metastatic bone disease.
- Prostate Imaging Study (BiPass): This imaging study is designed to enhance prostate cancer diagnosis and management.
All these crucial clinical trials are now actively enrolling patients. This means the next two years are projected to yield a wealth of valuable data, which could significantly influence future drug development and regulatory approvals. Bell Potter highlights that Telix has no intention of easing up on its Research and Development (R&D) expenditure, with multiple targets to explore beyond 2028, ensuring sustained innovation.
Encouraging Revenue Guidance for FY26
Furthermore, Bell Potter expressed satisfaction with management’s guidance for solid revenue growth in FY26, even before factoring in any potential contributions from new product approvals. The company has projected FY26 revenues to fall within the range of $950 million to $970 million, excluding the impact of any new approvals.
This guidance is considered bullish by Bell Potter, as it surpasses their most recent forecast of $925 million. The projection assumes continued market share expansion and a successful transition of existing Illuccix clients to the higher-reimbursed Gozellix product. Notably, the lower end of Telix’s guidance is already 2% above market expectations, and Bell Potter’s FY26 revenue forecast remains unchanged at this time.
Bell Potter’s Investment Recommendation
Based on these factors, Bell Potter has maintained its “Buy” rating on Telix Pharmaceuticals shares. While they have adjusted their price target downwards to $19.00, this still represents a significant potential upside of 82% for investors over the next 12 months, given the current share price of $10.43.
The brokerage acknowledged that FY25 presented challenges for Telix, including two Complete Response Letters (CRLs) from the FDA and a series of negative news events, such as the recent abrupt resignation of its Chairperson. However, Bell Potter emphasised that the company’s clinical programs are progressing well and that Telix is adequately funded to support these ongoing efforts.
They anticipate a similar operational environment in CY26, but with the absence of regulatory setbacks. The long-term outlook for revenue growth remains positive, and the short-term guidance is considered realistic. Potential near-term catalysts include crucial data readouts from the Prostact Global trial. Additionally, Bell Potter expects the resubmission of the Pixclara Biologics License Application (BLA) to the FDA within the coming weeks.
