A month is a long time on Wall Street. For one of 2020’s star performers, it has been a stark reminder how quickly sentiment can turn.
Over the past month, shares of Inovio Pharmaceuticals (INO) have plummeted by 50% as the tides have turned against this high-flying coronavirus stock. Faced with stiff competition in the race to be first to market with a COVID-19 vaccine, investors have seemingly lost confidence in the small biotech’s ability to beat its bigger rivals.
But not all on the Street have lowered expectations. Benchmark analyst Aydin Huseynov reiterated a Buy on INO shares alongside a $36 price target. The upside potential from current levels is a massive 272%. (To watch Huseynov’s track record, click here)
So, what’s driving Huseynov’s confidence?
In a recently published article in the New England Journal of Medicine, the government’s OWS (Operation Warp Speed) program laid out its vaccine selection strategy. The program has taken a diverse approach, extending to four different platforms, each one made up of two companies. These include an RNA platform (MRNA, BNTX), live vector platform (AZN, JNJ), protein-based (NVAX, SNY/GSK), and attenuated live vector platform (no companies have been earmarked and none are in clinical trials yet).
So, where is Inovio? The company is not on the list, which came as a surprise to Huseynov, given “the DoD is supporting Inovio’s technology/platform, and DoD is part of OWS.”
Interestingly, however, Huseynov believes Inovio’s exclusion is based on its differentiated approach, which could result in adoption elsewhere.
The analyst explained, “We think that by emphasizing syringe-based delivery, it is possible that US-based DNA plasmid vaccine company Inovio, which uses a smart device delivery, may end up being initially sponsored by non-US organizations... It is possible INO may end up receiving CEPI/Gates/Korea/DoD financing first, and then OWS may weight in.”
So, that’s Benchmark’s view, what do Huseynov’s colleagues make of Inovio’s prospects? The rest of the Street currently takes a more measured approach. Based on 2 Buys, 5 Holds and 1 Sell, the stock has a Hold consensus rating. However, due to the recent sell off, the $19 average price target could provide investors with returns of 95% in the year ahead. (See INO stock analysis on TipRanks)
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