This Pharma Stock Shows Strength, Eyes Entry As Earnings Surge 59%

Fad investing ideas can come and go, but sturdy pharma stocks offer promising upside opportunities. With that in mind, Ligand Pharmaceuticals (LGND) is building a base as earnings surge.

Florida-based Ligand develops and acquires technologies that help create medicine. Its three main revenue streams are royalties from commercialized products, licensing payments and the sale of its patented material Captisol. The latter is a solubility enhancer that enables the safe injection of drugs.

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Its strategy has increasingly shifted toward being a royalty aggregator. Back in December, Ligand Chief Executive Todd Davis said it has more than $1 billion in deployable capital to purchase more royalties.

The stock’s all-around performance is formidable, which is reflected in its IBD Composite Rating of 96 out of 99. Price performance is a strong attribute as the stock stands among the top 8% of equities in terms of gains over the past 12 months. The stock is even better from a fundamental perspective as it holds an Earnings Per Share Rating of 94 out of 99.

Per-share earnings have grown by an average of 47% over the past three quarters. This is above the 25% growth sought by disciples of The IBD Methodology. Earnings popped 59% to $2.02 per share in the most recent quarter.

Meanwhile, Wall Street expects full-year earnings to rise 5% this year before accelerating to 14% growth in 2027.

Ligand Pharmaceuticals Stock Analysis

The pharma stock is near a consolidation ideal buy point of 212.49, MarketSurge analysis shows. A lower alternate entry of 210.27 is also in play.

This is a fourth-stage pattern for the stock, which is a negative. However, it has bullishly cleared its 50-day line even as the broader equity market came under pressure.

It is also clear of its short-term moving averages, a further positive.

In an encouraging sign, the stock’s relative strength line has surged to new highs, eyeing a potential breakout. So far in 2026, the stock has climbed more than 6%.

Big Money has been adding to holdings of Ligand stock of late, with its Accumulation/Distribution Rating standing at C+. In total, 67% of shares are held by funds.

Noteworthy backers of the growth stock include the Invesco Discovery Fund (OPOCX), which increased its holdings in the most recently reported quarter.

Analysts Back Pharma Stock

Wall Street analysts are currently bullish on Ligand’s prospects. The stock holds a consensus rating of strong buy, and has exceeded the average price target of 245.86, according to TipRanks.

Citi analyst Yigal Nochomovitz is even more enthusiastic, rating Ligand a buy with a 270 target. The pharma firm’s management continues to “emphasize discipline,” and achieving a 23% year-over-year topline growth rate “appears feasible,” the analyst said in a Feb. 26 research note.

“We believe Ligand offers an interesting value proposition for investors seeking to partake in biotech’s possible upsides while minimizing the inherent volatility of the sector,” Nochomovitz said. “LGND’s portfolio of royalty assets is diversified across mid-to-late-stage development and commercial products, limiting risks associated with concentrated investment exposure without restricting upside.”

Please follow Michael Larkin on X at @IBD_MLarkin for more analysis of growth stocks.

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