The Underdog EDIT has a 55% upside Potential
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While stocks have been on a roll in the past three years, many speculative and unprofitable companies have struggled, and investors have moved on. One such company is $Editas Medicine(EDIT)$, a clinical-stage genetic editing biotech.
But many Wall Street analysts are bullish on this stock. The average target price for Editas is $15.64, which means there′ s about 55% upside from the stock's $10.06. Can the company hit that target next year? Stay tuned!
Multiple Catalysts on the Horizon
Last year was an exciting one for genetic editing. Editas released encouraging data from its ongoing trials for EDIT-301, a potential drug for treating transfusion-dependent beta-thalassemia (TDT) and sickle cell disease (SCD), two rare blood disorders.
And the safety profile for EDIT-301 looks reasonable too. Recently, Editas reported that the FDA has agreed to treat its ongoing EDIT-301 study for SCD as a 1/2/3-phase trial. This means Editas won't need to conduct another study to support EDIT-301 for SCD, assuming the final data is positive.
In addition, Editas reported positive results from its EDIT-301 trial for TDT patients. The company plans to release more data from both trials this year.
Short-Term and Future Prospects
Positive data should help steer Editas's stock in the right direction. As a clinical-stage biotech, the company's financials also look strong.
While still unprofitable, Editas posted a net loss per share of $0.23 in the fiscal fourth quarter, much better than the net loss per share of $0.88 in the year-ago quarter.
Plus, Editas ended the year with $427.1 million in cash, equivalents and marketable securities. Combined with other projects, including a recent licensing agreement with $Vertex Pharmaceuticals(VRTX)$ that allows the latter to use Editas' gene-editing technology, should keep the company afloat until 2026.
Now, the question is: Can Editas hit Wall Street's target price next year? The odds are in its favor. Smaller biotechs can see their stock prices surge 55% in a year, sometimes even in a day, on very strong clinical progress. And with multiple data readouts expected from Editas in the next 12 months.
Admittedly, Editas has innovative potential, but the risk is still too high for most investors. If the company can't deliver on its promises, investors could be holding worthless shares.
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