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On Thursday, Stifel analysts lowered their price target on Geron Corporation (NASDAQ:GERN) shares to $4 from the previous $8, while continuing to endorse the stock with a Buy rating. The revision comes as GERN shares have declined nearly 39% in the past week and 65% over the last six months. According to InvestingPro data, the stock’s RSI suggests it’s currently in oversold territory. The revision reflects a tempered outlook for the biopharmaceutical company, with analysts citing several factors influencing the decision.
The analysts noted that the recent commentary on flattening sales has negatively impacted perceptions of Geron’s execution and strategic direction. While the company maintains a strong financial position with more cash than debt and a healthy current ratio of 5.56, InvestingPro analysis indicates it’s quickly burning through cash. The company is expected to remain under scrutiny, with a focus on prescription trends as it attempts to implement commercialization changes that could potentially lead to increased sales.
Despite the reduced sales forecast and the slower uptake of Geron’s drug Rytelo, Stifel analysts remain optimistic about the drug’s market potential and value proposition. The analysts disagree with the management’s portrayal of Rytelo’s adoption, especially considering the unmet medical needs, updated National Comprehensive Cancer Network (NCCN) treatment guidelines, and positive feedback from key opinion leaders (KOLs).
Adjustments to the price target were made based on lowered revenue estimates for Rytelo in lower-risk myelodysplastic syndromes (LR-MDS) for the fiscal years 2025 and 2026, as well as peak U.S. sales predictions. The new target also accounts for a more gradual European Union launch, slightly increased administrative expenses, and delays in label expansion into JAK-inhibitor refractory myelofibrosis, now projected for fiscal year 2029.
The analysts concluded that Geron’s current valuation, with an approximately $800 million fully-diluted enterprise value (EV), suggests that the company’s transition from a growth story to a value-based narrative is now fully realized. With a market capitalization of approximately $979 million and significant revenue growth potential, InvestingPro analysis suggests the stock is currently undervalued. Subscribers can access 12 additional ProTips and a comprehensive Pro Research Report for deeper insights into GERN’s valuation and growth prospects.
In other recent news, Geron Corporation reported its fourth-quarter earnings for 2024, revealing a net product revenue of $47.5 million, which slightly exceeded internal estimates but fell short of the analyst consensus of $61.93 million. Despite surpassing some expectations, the company missed the earnings per share forecast with a reported EPS of -$0.04 compared to the anticipated -$0.03. Following these announcements, analysts have adjusted their outlooks on the company. Scotiabank (TSX:BNS) reduced Geron’s stock price target from $6.00 to $4.00, maintaining a Sector Outperform rating, while TD Cowen lowered its target from $10.00 to $5.00 but kept a Buy rating. Meanwhile, H.C. Wainwright downgraded the stock from Buy to Neutral, citing stagnant revenue trends and a need for increased product awareness among healthcare professionals.
Geron’s management acknowledged a plateau in new patient starts for its drug Rytelo, primarily used in treating lower-risk myelodysplastic syndromes (LR-MDS), which has been a concern for investors. The company plans to address this by enhancing physician education and conducting more trials to expand Rytelo’s application. Despite the challenges, Geron ended the year with a strong cash position of $502.9 million and anticipates reaching profitability without additional financing if their projections are met. The company is focused on increasing Rytelo’s adoption in earlier lines of therapy to drive future growth.
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