Citigroup (NYSE: C) Reiterates 'Buy' on Zymeworks (NASDAQ: ZYME) Following Theravance Biopharma (NASDAQ: TBPH) Acquisition

• Citigroup maintains a "Buy" rating for Zymeworks, raising its price target to $37 from $35.
• Zymeworks is set to acquire Theravance Biopharma in an all-cash transaction valued at approximately $929 million, adding the COPD treatment YUPELRI® to its portfolio.
• The acquisition is expected to be accretive to Zymeworks' earnings per share, supported by a unique financing structure including a $350 million non-recourse note and a future $100 million milestone payment.

Analyst firm Citigroup (NYSE: C) reiterates its "Buy" rating for Zymeworks (NASDAQ: ZYME), a biopharmaceutical company developing therapeutic treatments. Alongside the rating, Citigroup also increases its price target on the stock to $37 from a previous $35. This update comes as the stock trades at $24.10 per share.

This positive outlook follows Zymeworks' significant strategic move to acquire Theravance Biopharma (NASDAQ: TBPH). As highlighted by GlobeNewswire, the all-cash transaction is valued at approximately $929 million. Zymeworks will pay $17 per share for Theravance, with the companies expecting the deal to close in the second half of 2026.

The acquisition adds YUPELRI®, a treatment for chronic obstructive pulmonary disease (COPD), to Zymeworks' commercial portfolio. This move is expected to be accretive, meaning it should increase the company's earnings per share. YUPELRI is projected to generate approximately $60 million in annualized cash flow at its current rate.

The deal is supported by a unique financing structure. This includes a $350 million non-recourse note, a loan secured only by the asset it finances, in this case, the YUPELRI profit share. The financing also uses Theravance's expected cash balance of $360 million, with Zymeworks contributing $219 million.

To further support its cash position, Zymeworks anticipates receiving a $100 million milestone payment in the first quarter of 2027. This payment will help offset the company's cash outlay for the acquisition. Zymeworks' stock has traded between $11.51 and $29.75 over the past 52 weeks.