What happened
Shares of the commercial-stage gene therapy company bluebird bio (BLUE 1.13%) are having a strong session Wednesday. The biotech's stock was up by a noteworthy 18.8% on heavy volume as of 10:41 a.m. ET today.
What's fueling this double-digit uptick? Ahead of the opening bell, news hit that Bank of America securities analyst Jason Gerberry upgraded the stock to buy from neutral, citing the company's strong prospects in sickle cell disease (SCD) as the main reason for the upgrade.
So what
In April, bluebird submitted its long-awaited regulatory filing to the Food and Drug Administration (FDA) for the gene therapy lovotibeglogene autotemcel (lovo-cel) as a treatment for SCD. After accepting the filing last month, the FDA set a Prescription Drug User Fee Act date of Dec. 20, 2023.
If approved in this setting, Wall Street expects the therapy to drive a healthy uptick in the drugmaker's annual sales. Analysts' most optimistic estimates suggest that bluebird's top line could rise by as much as 200% in 2024, compared to 2023. This bullish revenue forecast implies that the biotech was significantly undervalued prior to today's rally.
Now what
Is bluebird stock worth the risk? Although there are reasons to be optimistic about the biotech's near-term future, challenges do exist. Commercialization of novel gene therapies has proved to be difficult due to the burdensome logistics involved.
Moreover, lovo-cel is targeting a highly competitive indication. Consequently, this stock probably isn't suited for all but the most aggressive investors right now.
