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Ocugen’s Valuation Deserves a Haircut, Says Analyst
Marty Shtrubel
May 10, 2021, 03:42 PM
Ocugen (OCGN) has been a 2021 success story, as the eye disease specialist has decided to moonlight in the lucrative world of coronavirus stocks.
The company has inked a deal with Bharat Biotech to bring the India-based company’s Covid-19 vaccine Covaxin to the U.S. It’s a gamble that has paid off handsomely so far, particularly in the stock market’s eyes; even after pulling back since the beginning of May, the stock’s year-to-date performance shows gains in the 455% ballpark.
Does the rally have more legs? According to Chardan analyst Keay Nakae, the stock might have used up all the fuel in the tank already.
Nakae’s skeptical analysis follows on from Ocugen’s recent quarterly report. Being a pre-revenue company, the bottom-and top-line results are of less importance. More pertinently, investors wanted to get an update regarding Covaxin’s progress, and right now, the company’s target of getting the FDA to issue an EUA for Covaxin has stalled (Covaxin has already been granted an EUA in India).
Ocugen has commenced discussions with the regulatory body, and a Master File containing vital information and data to date (including preclinical studies, CMC, and clinical studies) has already been submitted. However, there has been a delay in obtaining additional data from Bharat that is required to complete the EUA submission, due to the current surge in COVID-19 cases in India.
And according to Nakae, time is running out.
“The Covid-19 vaccine landscape in the U.S. remains fast changing, moving in a direction that we believe is reducing the potential market advantages that COVAXIN may offer,” the 5-star analyst said. “Compared to just a month ago, the U.S. is no longer supply-constrained.”
Moreover, in their respective development efforts to combat emerging variants and show their vaccines are suitable to younger patients, both Moderna and Pfizer-BioNTech are making progress.
These are issues which need to be considered when mulling an investment in OCGN, says Nakae, who concludes, “We believe that investors should weigh these developments against the attractive features of COVAXIN’s inactivated intact virion design…”
Ultimately, Nakae’s advice is to say on the sidelines. The analyst reiterates a Neutral (i.e. Hold) rating for the shares, while reducing the price target from $13 to $8. The reduced figure implies ~23% downside from current levels
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