What happened
Shares of clinical-stage biotech Ocugen (OCGN) are on fire today. Specifically, the biopharma's stock was up by a healthy 13.7%, on higher-than-normal volume, as of 2:46 p.m. ET Wednesday afternoon.
What's sparking this double-digit spike in Ocugen's share price? Mizuho Securities analyst Uy Ear reportedly initiated coverage on the biotech yesterday with a 12-month forward-looking price target of $5 per share. This stately price target implies a near-100% upside potential relative to Tuesday's closing price.
So what
Mizuho's analyst noted that Ocugen's shares are only currently being valued at the commercial potential of its COVID-19 vaccine known as Covaxin. Covaxin is presently commercially available for adults in Mexico and it is being reviewed by regulatory authorities in Canada. Ocugen is co-commercializing the vaccine in North America with its developer Bharat Biotech of India.
Mizuho, in short, thinks the market is overlooking the deep value proposition of the biotech's eye disease candidate, OCU400. OCU400 is a modifier gene therapy in early- to mid-stage development for RHO-related retinitis pigmentosa. If approved, it could one day generate several hundred million in sales for this high-value indication.
Now what
Is Ocugen's stock a buy in the wake of this analyst upgrade? It all depends on your comfort with risk. Ocugen's shares probably are undervalued in light of its opportunities in both COVID-19 and retinal disorders. Yet the company still has a lot of work to do to make Covaxin a commercial success in North America. What's more, OCU400 is likely two to three years away from a regulatory filing. This biotech growth stock, in turn, is probably best suited for investors with a high tolerance for risk.
