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On Friday, Cantor Fitzgerald reaffirmed its Overweight rating on Zai Lab (NASDAQ:ZLAB) despite recent market pressures. Trading at $24.32, Zai Lab stock has experienced significant downward movement, dropping 34% compared to the 8% decline in the XBI biotech index over the past week. According to InvestingPro data, the stock's RSI suggests oversold conditions, with a sharp -23.45% decline in the past week. The decline in share value is attributed to the escalating tariffs between the U.S. and China, as well as heightened geopolitical tensions.
The Cantor Fitzgerald analyst highlighted that Zai Lab, which is based in the Cayman Islands and audited by a U.S. firm, is not at high risk of being delisted from U.S. exchanges, even if the tariff dispute leads to further congressional actions. This is because Zai Lab is exempt from the Holding Foreign Companies Accountable Act (HFCAA). The company's strong financial position is evident in its healthy current ratio of 3.51 and more cash than debt on its balance sheet, as reported by InvestingPro.
Despite the current standoff over tariffs and the perceived risks for China-related stocks, the analyst noted that Zai Lab's core business operations in China remain largely unaffected. In fact, the ongoing situation might offer Zai Lab licensing advantages, which could be seen as a second-order benefit from the current U.S.-China trade tensions.
During a recent non-deal roadshow (NDR), Cantor Fitzgerald hosted Zai Lab's COO Josh Smiley and Investor Relations representative Christine Chiou. The discussions reinforced the view that Zai Lab's regional business strategy in China is robust and could withstand the current geopolitical climate.
Looking ahead, Cantor Fitzgerald's fundamental outlook for Zai Lab remains stable. The firm expects Zai Lab to continue its progress towards achieving profitability by the fourth quarter of 2025, supported by impressive revenue growth of 49.59% over the last twelve months. According to InvestingPro analysis, which offers comprehensive research reports for over 1,400 US stocks, the company appears undervalued at current levels. Despite the potential for continued market volatility driven by macroeconomic sentiment and the evolving trade situation, the analyst's long-term expectations for the company have not been altered.
In other recent news, Zai Lab has been the focus of several analyst reports highlighting its growth potential and financial outlook. Cantor Fitzgerald maintained an Overweight rating on Zai Lab, emphasizing the potential of Bemarituzumab as a significant growth driver. This drug is currently in Phase 3 trials for treating gastric and gastro-esophageal junction cancer, with promising projections for future sales. Scotiabank (TSX:BNS) initiated coverage on Zai Lab with a Sector Outperform rating and a price target of $55, citing the company's global potential and strong execution as key factors. The analyst at Scotiabank also projected that Zai Lab could become cash flow positive by the fourth quarter of 2025, enhancing investor confidence.
Meanwhile, BofA Securities downgraded Zai Lab from Buy to Neutral, although it raised the price target to $36.10, reflecting a more tempered outlook for near-term growth. The firm noted the soft performance of some core products but acknowledged progress in Zai Lab's pipeline, including promising developments for VYVGART and other treatments. Despite the downgrade, BofA Securities recognized the potential of new indications and products in the pipeline, which could support future growth. These recent developments have investors closely monitoring Zai Lab's strategic positioning and financial trajectory.
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