On Tuesday, RBC Capital Markets significantly lowered its price target for Bluebird Bio (NASDAQ:) shares, moving from a previous $80.00 to a new target of $8.00. Despite this adjustment, the firm has maintained a Sector Perform rating on the biotechnology company’s stock. The stock currently trades at $9.37, having experienced a significant 65% decline over the past year.
The revision follows the reporting of three severe adverse events related to Bluebird Bio’s treatments, which has cast uncertainty over the company’s future prospects. According to InvestingPro data, the company’s stock typically trades with high price volatility, with shares ranging between $5.80 and $38.40 over the past 52 weeks.
RBC Capital’s stance on Bluebird Bio is cautious due to the speculative risks associated with these adverse events. The cases include one of acute myeloid leukemia (AML) and two of myelodysplastic syndromes (MDS) in patients treated for sickle cell disease (SCD) and cerebral adrenoleukodystrophy (CALD).
With these three cases occurring among approximately 170 patients, the analyst expressed concerns about the ability to conclusively determine the causes of these conditions, especially in SCD treatments where the clinical hold was lifted and lentiviral vector (LVV) was exonerated, leaving the role of the chemotherapy agent busulfan unresolved. InvestingPro analysis reveals the company is quickly burning through cash, with a concerning current ratio of 0.51, indicating short-term obligations exceed liquid assets.
In the case of CALD, the adverse event was directly attributed to an oncogene insertion caused by the LVV. This finding adds to the complexity of Bluebird Bio’s challenges as it approaches the planned division of its oncology business. The analyst also highlighted the company’s decision to deprioritize the European market for its CALD, SCD, and beta-thalassemia programs, which is expected to limit potential revenue streams.
The report underscores the difficulties Bluebird Bio faces in light of these health concerns and strategic decisions. As the company navigates through these developments, RBC Capital’s current rating reflects a stance of watchful caution, with the lowered price target indicating a significantly adjusted expectation for the company’s stock performance.
Despite these challenges, InvestingPro analysis suggests the stock is currently undervalued, with analysts anticipating sales growth in the current year. For deeper insights into Bluebird Bio’s financial health and 10+ additional ProTips, explore the comprehensive Pro Research Report available on InvestingPro.
In other recent news, bluebird bio has experienced several financial adjustments and outlook revisions. Analysts at Baird recently lowered the price target for bluebird bio to $54, citing near-term dilution as a key factor. Despite this, Baird maintains a positive long-term outlook for the company, emphasizing the potential of its lentiviral vector-based cell therapies.
On the other hand, BofA Securities downgraded bluebird bio’s stock from Buy to Neutral and reduced the price target to $0.50, following a reassessment of the company’s financial outlook and its key product, Lyfgenia for Sickle Cell Disease.
JPMorgan also downgraded bluebird bio’s stock to Underweight, following the company’s third-quarter financial results which revealed a loss per share of $0.31 and revenue of $10.6 million, falling short of the $18.3 million consensus estimate. Bluebird bio also announced a reduced cash runway, expected to last into the first quarter of 2025. This downgrade reflects the financial challenges the company faces, including a failed proxy vote that limits its ability to raise capital through equity financing.
During its Third Quarter 2024 Earnings Call, bluebird bio announced an increase in patient starts and a projected path to cash flow breakeven by the second half of 2025. Despite a decline in Q3 revenue to $10.6 million from $16.1 million in Q2, the company forecasts a rebound to at least $25 million in Q4 as patient infusions are set to rise. Bluebird bio is also implementing cost optimization strategies, including a planned 20% reduction in cash operating expenses by Q3 2025 and a reverse stock split proposal to regain NASDAQ compliance.
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