Clinical-stage biotech Editas Medicine (EDIT -1.63%) delivered quarterly results that fell well short of expectations on Wednesday. While one analyst trimmed her price target on the stock in response, she's still extremely bullish on its prospects. In fact, she believes it could nearly triple before long. Might she be on to something here?
Slight price target cut from a bull
That analyst is Citigroup prognosticator Samantha Semenkow. In the wake of Editas' latest earnings release, she shaved $1 off her price target on the company to $15 per share. She maintained her buy recommendation, since that lower target was still roughly three times the stock's price at the time.
Semenkow is staying the course despite Editas' disappointing first-quarter performance. The gene-editing company's revenue came in at $1.1 million in the first quarter, a precipitous drop from $9.9 million in the same period a year ago and far below the average pundit estimate of slightly less than $11 million.
The story was similar on the bottom line; Editas saw its net loss balloon to almost $62 million ($0.76 per share) from the year-ago deficit of $49 million. Analysts were collectively modeling only a $0.63 per share loss.
I should note here that biotech companies, particularly in the pre-commercial stage, can produce very volatile results as they develop what they hope will be successful products. Consequently, it is often not easy for analysts to accurately model their key fundamentals.
Still lofty potential
In Semenkow's latest research note on Editas, she waxed bullish on the company's goal to "focus efforts on functionally upregulating target gene expression in rare genetic diseases." In her view, this approach could lead the biotech to becoming "first-in-class" in certain indications, a position that would surely improve the fundamentals greatly.
Editas has always had excellent potential as a stock, as it's developing therapies for rare blood disorders that have tested well in early stage clinical trials. It therefore stands a good chance at the moment of being a top developer in this niche, with very favorable consequences for its investors. I'd be bullish on the company too at the current share price.
