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Is there value in CRISPR stock after heavy declines?

CRISPR Therapeutics [CRSP] stock has been on the decline for most of 2021, having seen its share price drop over 50%, and since July it’s pretty much been one-way traffic south. The Swiss-American biotech company has been facing up to several headwinds, including rising bond yields, supply chain issues, and economic disruptions as a result of the emergence of omicron.

It’s not all doom-and-gloom for CRISPR’s stock prospects though, with some analysts optimistic about the underlying strategy, and in particular its pioneering of gene-editing tech to target serious, hard-to-treat diseases, including sickle cell disease and beta thalassemia.

Despite the significant pullback this year, as an emerging, disruptive technology, does CRISPR offer investors an opportunity to invest at a low valuation with a long-term bullish view? Or do CRISPR’s headwinds give the stock a hard ceiling for the foreseeable future?

 

 

 

What’s happening with CRISPR stock?

CRISPR stock jumped from $91.82 at the start of November 2020 to a high of $220.20 on 15 January, but since then it’s been mostly downhill, with those gains completely wiped out. The gene-editing company's share price is down 53.40% year-to-date to $73.00 as at Monday 13 December’s close. Much of the decline has taken place over the last six months, with CRISPR stock falling 43.31% over the period to Monday’s close.

53.40%

Percentage CRISPR's stock is down in 2021

 

 

CRISPR’s Q3 results miss expectations

CRISPR’s latest results covering its third quarter, released on 3 November, delivered a narrower-than-expected loss of $1.67 per share versus an expected $1.75, but revenue came in well short of market expectations at $820,000, against estimates of $1.3m. Added to this disappointment has been the return of bearish momentum across the broader market, according to Motley Fool’s Keith Noonan, adding further pressure on CRISPR stock.

CRISPR’s Q3 net earnings loss of $127.2m was weaker than the $92.2m reported in the same period in 2020. InvestorPlace’s David Moadel notes the company’s R&D outlay in Q3 of $105.3m, and suggests that “perhaps the company should consider finding ways to curb its research and development expenses”.

 

Treatment approvals offer turnaround hope for CRISPR stock

CRISPR has a pipeline of promising medical treatments which have achieved clinical trials testing. CTX001, a gene-editing treatment for transfusion-dependent beta thalassemia and sickle cell disease, could have regulatory submissions in by the end of 2022, reports Noonan.

The US Food and Drug Administration also recently granted the regenerative medicine advanced therapy (RMAT) designation to CTX110, a cell therapy treatment for hematological malignancies, which should fast-track the product's testing. CEO Samarth Kulkarni the RMAT decision “is based on the encouraging clinical data we have presented thus far.”

The company has also recently received approval from Health Canada following the clinical trial application for its VCTX210 product, a stem-cell-derived, gene-edited therapy for the treatment of type 1 diabetes, developed with regenerative-medicine company ViaCyte, with patient enrolment set to begin by the end of this year. Kulkarni said it’s “an important milestone in enabling a whole new class of gene-edited stem cell-derived medicines”, reports InvestorPlace. The progress made with these medicines offers encouragement for investors in CRISPR stock.

 

What’s next for CRISPR stock?

Despite not being expected to report “meaningful revenue” until 2023, and being a high-risk stock, Noonan reckons that “recent pullbacks could provide a worthwhile entry point for investors seeking potentially explosive biotech stocks”.

Writing in Seeking Alpha, principal analyst and founder of JR Research, Jere Ong, acknowledges the “promising potential” in CRSP stock, “assuming the massive impact it will have on the medical industry”. Echoing the thoughts of Noonan, Ong rates CRISPR a ‘buy’ for speculative investors given its current valuation.

2023

When CRISPR will begin to report 'meaningful revenue', according to Motley Fool's Keith Noonan

 

With the company “demonstrating excellent progress on the regulatory front”, Moadel recognises a “compelling opportunity” with CRISPR, but say any prospective investors should keep an eye on the company’s expenditures and bottom line. Moadel is quite bullish on  CRISPR stock, believing that it’s “undervalued”, and has the potential to “return to its peak from January”.

The 19 analysts covering the stock have an average 12-month price target of $154.63, with a high estimate of $220.00 and a low estimate of $90.00, according to CNN. The average price target represents a 111.82% increase from Monday’s $73.00 closing level. And with 15 'buy', seven 'hold' and just one 'sell' rating with CNN, the current consensus among 23 polled investment analysts is to 'buy' CRISPR stock.

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