Scotiabank Downgrades Sage Therapeutics to "Sector Perform", Adjusts Price Target to $9.20

Scotiabank has downgraded Sage Therapeutics (SAGE) from "Sector Outperform" to "Sector Perform" and reduced its price target to $9.20, a 23.33% decrease from the previous target of $12.00. Analysts forecast an average target price of $8.50, with a high estimate of $12.00 and a low estimate of $5.00. The average target implies a 7.28% downside from the current price of $9.17.

Scotiabank (TSX:BNS) has downgraded Sage Therapeutics (NASDAQ:SAGE) from "Sector Outperform" to "Sector Perform" and reduced its price target to $9.20, a 23.33% decrease from the previous target of $12.00. The stock, currently trading at $9.17, has shown remarkable strength with a 56.75% gain over the past six months, though InvestingPro data indicates the shares may be overbought at current levels [1].

The rating change follows the June 16 announcement of Supernus’s tender offer for all outstanding Sage Therapeutics shares, which includes $8.50 per share plus a $3.50 contingent value right (CVR) tied to future zuranolone commercial milestones. The company maintains a strong financial position with more cash than debt and a healthy current ratio of 9.13 [1].

Scotiabank had previously speculated that Biogen (NASDAQ:BIIB), which already owns a 50% profit share in Zurzuvae in the U.S., might present a counteroffer to acquire the remaining stake and eliminate future ex-U.S. royalty obligations. After reviewing the published 14D-9 filing, Scotiabank now considers a counteroffer from Biogen or other parties unlikely, noting that Biogen had made what it describes as a "low-ball offer" in January [1].

Scotiabank’s new price target of $9.20 reflects the pending $8.50 per share tender offer plus a discounted value for the $3.50 CVR, with the firm calculating Sage’s cash position at approximately $4.76 per share by the end of Q3 [1].

In other recent news, Supernus Pharmaceuticals (NASDAQ:SUPN) has announced its intention to acquire Sage Therapeutics for $8.50 per share in cash, valuing the company at approximately $561 million in total equity value. The acquisition also includes a contingent value right potentially worth an additional $3.50 per share, depending on future performance milestones. This offer represents a premium over Biogen’s previous bid of $7.22 per share, which Sage had rejected earlier [1].

Analysts from H.C. Wainwright, TD Cowen, and Piper Sandler have adjusted their price targets in response to the acquisition, with H.C. Wainwright maintaining a Neutral rating and a $12.00 price target, while Piper Sandler downgraded Sage to Neutral from Overweight. TD Cowen lowered its price target to $8.50, aligning with the acquisition offer, and Truist Securities raised its target to $9.00, factoring in the potential value from contingent payments. The transaction is expected to close in the third quarter of 2025, with minimal regulatory hurdles anticipated [1].

Analysts have expressed varying levels of confidence in Sage’s postpartum depression treatment, Zurzuvae, with some viewing it as a key value driver for the company. The acquisition news has led to significant market activity, with Sage’s shares experiencing notable movement following the announcement [1].

References:
[1] https://uk.investing.com/news/analyst-ratings/scotiabank-downgrades-sage-therapeutics-stock-rating-to-sector-perform-93CH-4160335