Bank of America has initiated coverage of Ligand Pharmaceuticals Inc (NASDAQ:LGND) with a Buy rating and a $244 price target, citing the company’s royalty-focused business model and diversified portfolio as key drivers of continued earnings growth.
Ligand provides capital and technology to drug and medical device developers in exchange for royalties, creating a portfolio of more than 100 commercial and development-stage assets that generate high-margin returns.
In its initiation report, Bank of America analysts wrote that the company’s model allows it to generate “diversified, high margin returns” while offering investors exposure to the biopharma sector with lower risk.
“We believe Ligand can continue to deliver EPS growth, offering investors a way to capture biopharma's upside with less risk,” they wrote.
Ligand has posted strong share and earnings growth since transitioning to its current strategy in 2022, supported by a lean cost structure and growing demand across the industry for flexible, non-dilutive financing.
The analysts highlighted Ligand’s investment team as a key differentiator, noting its decades of industry experience and disciplined approach to deal-making. The firm said this track record strengthens confidence in Ligand’s goal of achieving a 23% compound annual growth rate in royalty receipts through 2030.
Bank of America also pointed to the company’s valuation, noting Ligand trades at about 25 times projected 2026 earnings, roughly in line with large-cap biopharma peers. Given the company’s growth outlook and scalable business model, the analysts said there could be room for further multiple expansion.
Ligand’s technology platforms, particularly its Captisol drug formulation technology, provide an additional source of revenue. Captisol is used to enhance the solubility and stability of oral drugs and is currently included in 17 approved therapies.
Those products generated about $40 million in royalties in 2025, up 30% from a year earlier, with Bank of America projecting further growth as additional Captisol-containing drugs gain regulatory approval.