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The Biotech Analyst Run Down For Wednesday

It was a relative day of calm in trading in the markets Tuesday after Friday's deep sell-off and Monday's snap back rally.  Equities posted slight losses on the day with both the S&P 500 and NASDAQ being off approximately a quarter of a percent.  High beta parts of the market fared much worse with the Russell 2000 being off one and a half percent with the biotech sector seeing a similar hit.

Pre-market futures are down slightly about a hour before the open.  While we await for the market to open, here are four biotech stocks garnering positive analyst commentary this morning.

Goldman Sachs is saying the recent sell-off in Myovant Sciences (MYOV) is a buying opportunity as they initiate the name as a new Buy with a $20 price target.  Goldman's analyst says the 'dip' 'provides a good entry point into a stock with "attractive" pipeline optionality. The investor debate over the intermediate term will center on the market opportunity for the GnRH antagonist class and what share relugolix can attain.  The analyst, however, thinks that the market has excessively discounted Myovant's prospects as his key opinion leader checks indicate no concerns about relugolix's placebo-adjusted response rate and enthusiasm for another treatment option for endometriosis and uterine fibroid'

Canaccord Genuity initiates Alphatec Holdings (ATEC) as a new Buy with a $7 price target.  The analyst there 'believes the company has the potential to emerge as a focused share taker in the US spine market. He noted the company has new management, new strategy, new distribution, and new products'

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Next up is Mesoblast (MESO).  It is reissued as a Buy at H.C. Wainwright today with a $6.50 price target.  They provide details of their valuation methodology below.

We derive a 12-month price target of $6.50 per share based on an NPV analysis of projected product revenues through FY2030. We assume a 12.2% discount rate, formulated by our calculation of Mesoblast’s weighted average cost of capital, and 3% terminal growth rate. We derive an NPV of $1.1B and subtract net debt of $9.2M to arrive at a 12-month price target of $6.74, which we round to $6.50."

Finally, late yesterday Cerus (CERS) was initiated as a new Buy with a $7 price target at Stifel Nicolaus.  Last week, in the first new analyst activity on the name in two months, Stephens resumed coverage on CERS with an Overweight and $8 price target.  Here is the commentary from that analyst call.

CERS’s pathogen reduction technology is increasingly being recognized as a vital tool for blood safety. As a result, there are numerous catalysts on the horizon, including the final FDA guidance for platelets expected in September. We see this announcement as a key driver of U.S. adoption for INTERCEPT treated platelets. Additional catalysts exist internationally for platelets and other products in 2020+, with cryoprecipitate representing a meaningful, intermediate opportunity. All of this should result in a significant revenue growth opportunity. We can make the case for CERS product revenues to grow from $73 million in 2019 to $500+ million by 2025. As revenues move higher, we think the stock follows."

And those are four small cap concerns analysts like this morning.

Thank You & Happy Hunting,

Bret Jensen


Every Monday morning we put out new research on an undervalued small or midcap stock and then outline a simple covered call strategy that can produce a double digit return in coming months even if the underlying stock doesn't move. If you are registered to receive our weekly free reports, you would have received our latest trade idea in your 'in' box before the bell Monday ➟ LOG-IN TO ACCESS FREE REPORTS


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