[Click e-Stock] "Celltrion Falls Short of Market Expectations, Second-Half New Product Performance Is Key"

1Q Results Grow but Fall Short of Market Expectations
Focus on New Product Impact in 2H... Anticipation for New Drug Performance

Celltrion's first-quarter results this year fell more than 10% below market expectations. At the corporate level, the company has also lowered its annual performance targets for some products, leading to projections that operating profit in 2025 will be lower than initially anticipated. Ultimately, analysts believe that the impact of new products in the second half of the year will be the key factor for overall performance.

On the 12th, KB Securities lowered its target price for Celltrion by 13.0% to 235,000 won, citing these circumstances. The closing price on the previous trading day was 158,000 won. The investment opinion of "Buy" was maintained.

In the first quarter of this year, Celltrion posted consolidated sales of 841.9 billion won and operating profit of 149.4 billion won. Compared to the same period last year, sales increased by 14.2%, and operating profit surged by an impressive 870.1%. Nevertheless, these results fell significantly short of market consensus, missing expectations by 10.6% and 30.6%, respectively.

Sales grew overall due to increased revenue from new products such as Remsima SC, Yuflyma, and Vegzelma, despite a decline in non-biopharmaceutical products (following the sale of Takeda's primary care business rights). The improvement in operating profit was mainly attributed to the end of amortization of intangible assets from mergers, as well as simultaneous improvements in inventory and sales mix.

The cost of goods sold ratio was slightly higher than previously expected, reaching 47%. This is believed to be due to the receipt of short-term contract manufacturing (CMO) volumes and the initial impact of starting operations at the third plant. Analysts expect that the cost ratio will improve from the second quarter, as the second yield improvement (TI) for Remsima and the TI versions of three products, including Herzuma, begin full-scale production.

It is somewhat concerning that the annual guidance for Zymfentra has been revised downward from the previous estimate of around 700 billion won to about 350 billion won. However, this is considered to be offset by the growth of new products such as Yuflyma and Stekyma. In addition, preclinical results for CT-P72, presented at this year's American Association for Cancer Research (AACR), confirmed maintained efficacy in HER2 high-expression breast cancer cell lines and reduced toxicity in low-expression cell lines.

In conclusion, there is a growing view that attention should be paid to the effects of new products and the results of new drug development, which will become more apparent in the second half of the year. Kim Hyemin, a researcher at KB Securities, explained, "As of the closing price on May 9, there is still 48.7% upside potential to the target price. If the company's core business continues to grow and meaningful results from ongoing investments in new drugs are repeatedly confirmed, the attractiveness of the stock will further increase."