U.S. stocks lower as investors rotate out of tech ahead of Jackson Hole
Tuesday, Canaccord Genuity analysts adjusted their outlook on Cibus (NASDAQ:CBUS), lowering the stock's price target from $20.00 to $18.00, while still recommending a Buy rating. This revision comes in the wake of the company's recent announcement of a direct stock offering aimed at funding its ongoing projects. The adjustment follows a challenging period for Cibus, which has seen its stock decline by over 85% in the past year, according to InvestingPro data.
Cibus disclosed its plans to generate approximately $22.6 million through a direct offering of about 9 million shares of its common stock. The capital raised is earmarked for the advancement of Cibus's gene-edited plant productivity traits and the further development of its soybean platform, which is currently in an advanced stage of editing. With a current market capitalization of approximately $73 million and a rapid cash burn rate, this funding is crucial for the company's operations, as highlighted in InvestingPro's analysis.
The terms of the offering involve the sale of 9.04 million shares of Cibus common stock at a price of $2.50 per share. The agreement includes key participants such as existing investors and Cibus CEO Rory Riggs. The expected closure date for the transaction is January 24, 2025.
Additionally, the deal encompasses the issuance of warrants for the purchase of up to an equivalent number of shares. These warrants can be exercised at $2.50 per share upon receiving stockholder approval and are redeemable once certain conditions are met. These conditions include the successful completion of an operational soybean platform and the company's common stock price remaining above $5.00 per share for 15 consecutive trading days.
The strategic move to raise funds through a direct offering reflects Cibus's commitment to its research and development initiatives. The company's focus on enhancing agricultural productivity through gene editing is poised to progress with the expected infusion of funds from this offering. InvestingPro analysis suggests the stock is currently undervalued, despite showing strong revenue growth potential. Subscribers can access 10+ additional ProTips and comprehensive financial metrics in the Pro Research Report, providing deeper insights into Cibus's financial health and growth prospects.
In other recent news, Cibus Inc., an agriculture chemicals company, has disclosed the approval of a new base salary of $320,000 for executive Carlo Broos. This comes as the company records significant revenue growth of over 440% in the last twelve months, despite operating at a loss. The decision indicates a change in the compensation arrangement for Mr. Broos, who is part of the company's top management team.
In the recent past, Cibus reported a net loss of $201.5 million, primarily due to an impairment of goodwill. However, the company anticipates earning $200 million annually in royalties from rice traits in the U.S. and an additional $150 million from expansion into Asian markets.
Jefferies recently adjusted its price target for Cibus, reducing it to $5.00 from the previous $8.00, while maintaining its Hold rating on the stock. This decision comes as Cibus is noted for carefully managing its balance sheet, focusing on maintaining the quality of its royalty economics.
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