Shares of Bluebird Bio (NASDAQ:BLUE) were plunging 19.3% lower as of 3:42 p.m. EST on Monday. The sharp decline came after two analysts downgraded Bluebird.
Morgan Stanley (NYSE:MS) 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.
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 (NASDAQ:TSVT). 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.
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.