Please ensure Javascript is enabled for purposes of website accessibility

Why Bluebird Bio Stock Plunged Today

By Keith Speights – Nov 8, 2021 at 5:30PM

Key Points

  • Goldman Sachs downgraded Bluebird from neutral to sell.
  • Morgan Stanley downgraded the stock from equal weight to underweight.
  • Concerns about Bluebird include its near-term commercialization challenges and recent spin-off.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Two analysts downgraded the biotech stock.

What happened

Shares of Bluebird Bio (BLUE -1.58%) were plunging 19.3% lower as of 3:42 p.m. EST on Monday. The sharp decline came after two analysts downgraded Bluebird.

Goldman Sachs (GS 1.53%) analyst Salveen Richter downgraded the biotech stock from neutral to sell. Richter set a price target of $10, nearly 24% below Bluebird's closing price on Friday.

Morgan Stanley (MS 0.90%) analyst Matthew Harrison also downgraded the stock from equal weight to underweight (the equivalent of a sell recommendation). Harrison established a price target of $11, roughly 16% lower than Bluebird's closing price on Friday. 

A person giving a thumbs down sign.

Image source: Getty Images.

So what

Morgan Stanley's Harrison thinks that "commercialization will remain challenging" for Bluebird. That seems to be a fair assessment.

Bluebird announced in August that it planned to exit the European market for its gene therapies. In October, the company said that it would withdraw its regulatory applications for Skysona with the European Union and the U.K.

There's also some uncertainty about Bluebird's spin-off of its oncology business. The oncology unit is now a separate entity, 2seventy Bio (TSVT 1.10%). Bluebird will continue to focus on genetic diseases.

However, Wall Street analysts tend to focus more heavily on the near-term prospects for a stock than they do the long-term prospects. It's possible that Bluebird's spin-off strategy could pay off for investors over the long run.

Now what

Bluebird hopes to receive acceptance of its biologics license application (BLA) for beti-cel in treating beta-thalassemia this month. The company is talking with the U.S. Food and Drug Administration (FDA) about lifting the clinical hold on eli-cel (Lenti-D). It plans to submit a BLA for the therapy in treating cerebral adrenoleukodystrophy (CALD), a rare genetic disease, by year's end.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Bluebird Bio. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.