Halozyme Therapeutics (HALO) is a $9 billion biotech focused on oncology and boasting sales and profit growth of 29% and 46%, respectively, while trading a sub-11x forward P/E.
HALO is focused on the development and commercialization of novel treatments for oncology indications by targeting tumor microenvironments. The company also licenses its novel drug delivery technology, ENHANZE, for subcutaneous (SC) administration of drugs.
The company’s ENHANZE drug delivery technology helps in developing the SC formulation of drugs for several companies, including Roche, Takeda, J&J, AbbVie, Lilly, and Bristol-Myers.
These companies are using this technology for developing the SC formulation of their currently marketed drugs. Halozyme also recognizes revenues from the sale of drug products to its collaboration partners for the development of drugs using its ENHANZE platform.
Halozyme now has eight marketed partnered drugs based on this technology.
The HALO Opportunity
On May 28, Bristol Myers Squibb (BMY) and Halozyme announced that the European Commission approved a subcutaneous formulation of Opdivo for treating multiple adult solid tumors.
The decision makes Opdivo the first PD-1 inhibitor cleared for subcutaneous use in the EU, the companies said.
Bristol Myers said approval was based on phase 3 data showing noninferior pharmacokinetics and comparable efficacy and safety versus the intravenous formulation.
This news struck me as confirmation of the strong growth story in Halozyme and I bought shares for my Healthcare Innovators portfolio. I told my members, "Start a position here at $55 and look to add on dips under $50."
We never got another dip under $50, but we had about a month to buy down to $51 before the stock took off and made new all-time highs yesterday above $79.
We'll look at the rising estimates for HALO after we review the curious tale of an inefficient market that handed us this gift in May.
Why Did HALO Drop 25% on May 13?
Morgan Stanley downgraded HALO's rating to "equal-weight" from "overweight" and cut their PT to $62 from $73. Here are the bullets from their May note, courtesy of Dow-Jones...
>The U.S. Centers for Medicare and Medicaid Services (CMS) draft may impact HALO's drug pricing, posing a headwind for hyaluronidase products, brokerage Morgan Stanley says
>CMS said on Monday it would announce a list of 15 drugs eligible for a third round of Medicare price negotiations by early February next year
>HALO utilizes hyaluronidase enzymes to develop injectable versions of various drugs
>MS says the draft guidance could sway industry incentives and pose a meaningful headwind for hyaluronidase combination products for HALO
Buying the Value as Risk Gets Discounted
Here's what I told my Healthcare Innovators members on May 28 when we dove in with the stock trading under 10 times earnings...
In the last two weeks since the Morgan Stanley bomb, estimates have only gone up, making HALO a Zacks #1 Rank again.
HALO presents a compelling investment case as a leading innovator in enzyme-based drug delivery solutions, notably through its proprietary recombinant human hyaluronidase (rHuPH20) technology. This platform enables subcutaneous administration of biologics, broadening patient access and driving multiple high-value partnerships with major pharmaceutical companies.
Halozyme’s technology underpins several blockbuster products, including Darzalex SC, Phesgo, and VYVGART Hytrulo, with new launches like Ocrevus Zunovo and Tecentriq Hybreza expanding its reach.
Financially, Halozyme's performance is robust, reporting a 35% year-over-year revenue increase to $265 million in Q1 2025, with royalty revenues up 39% and net income margins exceeding 43%. The company’s return on equity is exceptionally high, surpassing 150%, and it maintains strong free cash flow and liquidity, supporting a $250 million share repurchase program.
Analysts forecast continued growth, citing 11 new catalysts in approvals and indications, and the company recently raised its 2025 financial guidance.
While shares have faced volatility due to regulatory headwinds, Halozyme’s diversified portfolio, strategic partnerships, and strong execution position it as a resilient technology platform for big pharma.
Where is HALO Now?
On August 5, Halozyme delivered a strong June quarter report with a 25% earnings beat and shares gapped above $60. On August 19, I told members "Halozyme continues to impress with a post-earnings ramp above $70 even with today's broad market selling. Morgan Stanley raised their PT this week to $80 from $75."
In the past two months, analysts have taken this year's EPS consensus up 12.8% from $5.48 to $6.18. And next year's profit projection, among five analysts, jumped 17.7% from $6.43 to $7.57.
This likely means the Morgan Stanley CMS fears have been fully allayed.
The average analyst price target for HALO, according to Zacks data from 9 analysts, is around $70, with a low of $51 and a high of $91.
This tells you a lot about analyst targets, when the regulatory narrative can shift and new company partnerships can surface at any time.
And the smart money bailed on the stock too in the June quarter with big sellers overpowering big buyers by a net 4.3 million shares. It would seem that many who left shares behind in the $50s back then were doing some backflips to get back in during the September quarter.
Bottom line: HALO might have more surprises in store, including another big earnings beat, by the time the company delivers their next report card in a month or so.
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Halozyme Therapeutics, Inc. (HALO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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