Ironwood Pharmaceuticals (IRWD, Financial) has been downgraded by Craig-Hallum from "Buy" to "Hold" following significant developments that have altered the company’s risk-reward profile. The price target for Ironwood has been drastically reduced from $7 to $1. This adjustment comes after the company disclosed that the U.S. Food and Drug Administration (FDA) will require a second Phase 3 trial for its drug candidate apraglutide, potentially pushing its approval to around 2029.
The decision for an additional trial arises partly from unexpected issues in the STARS study, which revealed lower-than-anticipated drug exposure due to dose preparation problems. As a result, the anticipated timeline for generating significant apraglutide revenues may not align with the expiration of Linzess's patent, presenting substantial challenges for Ironwood.
This new trial requirement will necessitate additional funding, which could impede the company's earnings growth and limit its ability to pay down existing debt ahead of the patent expiration of Linzess. Furthermore, the delay complicates the refinancing of the convertible notes due in June 2026, according to Craig-Hallum.
While Ironwood is exploring strategic alternatives to navigate these challenges, the uncertainty surrounding the company's future has intensified. This has prompted Craig-Hallum to adjust its outlook on Ironwood, reflecting the complexities and financial strains the company now faces.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 6 analysts, the average target price for Ironwood Pharmaceuticals Inc (IRWD, Financial) is $6.12 with a high estimate of $14.00 and a low estimate of $0.70. The average target implies an upside of 746.95% from the current price of $0.72. More detailed estimate data can be found on the Ironwood Pharmaceuticals Inc (IRWD) Forecast page.
Based on the consensus recommendation from 7 brokerage firms, Ironwood Pharmaceuticals Inc's (IRWD, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Ironwood Pharmaceuticals Inc (IRWD, Financial) in one year is $7.35, suggesting a upside of 917.72% from the current price of $0.7222. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Ironwood Pharmaceuticals Inc (IRWD) Summary page.
