Baird cuts Iovance stock rating, slashes price target to $3

On Friday, Baird research firm adjusted its stance on Iovance Biotherapeutics (NASDAQ:IOVA) shares, downgrading the biotechnology company’s stock from Outperform to Neutral. The firm also significantly reduced its price target for Iovance, bringing it down to $3.00 from the previous $20.00. The downgrade follows Iovance’s disappointing performance in the first quarter of 2025 and a downward revision of its full-year sales forecast. According to InvestingPro data, the stock has already fallen over 70% in the past six months, with analyst targets now ranging from $5 to $32.Want deeper insights? InvestingPro subscribers have access to 10+ additional expert tips and comprehensive financial metrics for Iovance, helping investors make more informed decisions.

The Baird analyst cited several reasons for the downgrade, including a recent quarterly earnings miss by Iovance and a substantial cut in the sales outlook for the fiscal year 2025. These developments have made it challenging for Baird to project a timeline for Iovance to reach a breakeven point financially. InvestingPro data shows the company’s current revenue growth forecast for FY2025 stands at 176%, though analysts don’t expect profitability this year. The analyst reflected on their previous optimism about the company’s market potential in melanoma treatment and the possibility of expanding into non-small cell lung cancer (NSCLC) therapies. However, they acknowledged that maintaining the Outperform rating was a mistake in retrospect.

Iovance’s financial struggles have been exacerbated by a high rate of cash consumption, commonly referred to as a "burn rate," which further complicates the company’s path to profitability. While InvestingPro analysis indicates the company holds more cash than debt and maintains liquid assets exceeding short-term obligations, the significant negative EBITDA of -$365 million in the last twelve months raises concerns. These internal financial challenges come at a time when the broader capital markets are facing their own difficulties, making it harder for companies like Iovance to secure additional funding.

The analyst’s statement provides insight into the reasoning behind the downgrade: "We had been positive on a large market in melanoma, with NSCLC as a potential upside driver, but, in hindsight, we were wrong to keep our Outperform rating as long as we did. Following a big 1Q25 miss and a significant decrease in FY25 sales guidance, on top of a high burn rate, it’s harder for us to model breakeven within a reasonable timeframe. All this, coupled with a challenging capital market backdrop, we are downgrading our rating to Neutral and lowering our price target to $3." Despite these challenges, InvestingPro’s Fair Value analysis suggests the stock may be undervalued at current levels.

This revised outlook by Baird reflects the firm’s current assessment of Iovance’s financial health and market position. Investors will be monitoring the company’s future performance closely, particularly in light of the recent adjustments to its financial projections and the broader economic context.

In other recent news, Iovance Biotherapeutics reported its financial results for the first quarter of 2025, revealing a significant shortfall in earnings and revenue compared to analyst forecasts. The company posted an earnings per share (EPS) of -$0.36, missing the expected -$0.24, while revenue came in at $49.3 million, significantly below the anticipated $83.27 million. Following these results, Iovance revised its full-year revenue guidance to a range of $250-$300 million, indicating expectations for growth despite the initial setback. The company plans to increase patient infusions and expand its operations internationally, with targets for approvals in the UK, Canada, and the EU. Additionally, Iovance is focusing on developing next-generation cell therapies to strengthen its market position. Despite the challenges, the company maintains a strong cash position of $366 million and expects gross margins to exceed 70% in the coming years. Analyst feedback indicates that while the current financial performance was disappointing, there is potential for recovery and growth based on strategic initiatives.

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