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Stifel, a financial services company, adjusted its price target for Cerus (NASDAQ:CERS) Corporation (NASDAQ: CERS), a biomedical products company, to $3.00, down from the previous $6.00. Despite this change, Stifel continues to recommend buying the stock.
Cerus recently announced that the European Union's review of its INTERCEPT Red Blood Cells (RBC) product concluded without granting approval, citing the need for additional data.
This development is expected to delay the approval process by more than a year. Cerus remains positive about the future of its INTERCEPT program and plans to pursue approval with a new submission.
The lack of EU approval for the RBC product was characterized as a setback, especially since it was seen as a significant potential driver for the company's growth. The reduced price target reflects not only this recent news but also a more cautious valuation of Cerus's base business.
In other recent news, Cerus Corporation has secured a significant contract with the Biomedical Advanced Research and Development Authority (BARDA), valued at up to $248 million. This funding will support the advancement of Cerus's INTERCEPT red blood cell (RBC) system, from U.S. Phase 3 studies to anticipated premarket approval and eventual commercialization. Cerus has also reported an upward revision in its annual product revenue guidance for 2024, now standing between $175 million to $178 million, reflecting a robust performance primarily due to the increasing use of the INTERCEPT blood system.
BTIG analysts have reiterated a Neutral rating for Cerus, following the company's stronger-than-expected performance in the second quarter, highlighting the raised product revenue guidance and robust growth in the U.S. and Canada. Analysts from BTIG suggest that the current trading price of Cerus shares aligns with other small-cap companies.
In Europe, Cerus's application for CE Mark under the Medical Device Regulation concluded without approval, and the company, in collaboration with TÜV-SÜD, is strategizing for a potential new regulatory submission.
InvestingPro Insights
Recent InvestingPro data sheds additional light on Cerus Corporation's financial position. The company's market capitalization stands at $333.53 million, with a revenue of $169.98 million over the last twelve months as of Q2 2023. Despite facing challenges in product approval, Cerus has shown a revenue growth of 10.79% during this period, indicating some resilience in its business model.
InvestingPro Tips highlight that Cerus operates with a moderate level of debt and its liquid assets exceed short-term obligations, which could provide some financial flexibility as the company navigates the approval process for its INTERCEPT Red Blood Cells product. However, it's worth noting that Cerus is not currently profitable, aligning with the analysts' expectations mentioned in the article.
The company's Price to Book ratio of 6.74 suggests that investors are placing a premium on Cerus's future potential, despite the recent setbacks. This valuation metric, combined with the absence of dividend payments, indicates that the market may be focusing on the company's growth prospects rather than immediate returns.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for Cerus Corporation, providing a deeper understanding of the company's financial health and market position.
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