Battleground: Analysts diverge on bluebird bio after investor day
Shares of bluebird bio (BLUE) are sliding after Cantor Fitzgerald analyst Elemer Piros downgraded the stock to Sell, citing a lack of catalysts in the near-term as he thinks initial data on improved transduction efficiency in beta-thalassemia and severe sickle cell disease may not become available until 2018. Conversely, his peers at Leerink and SunTrust remain bullish on bluebird bio and the company's outlook. LACK OF CATALYSTS: After attending bluebird's analyst and investor meeting yesterday, October 13, Cantor Fitzgerald's Piros downgraded bluebird bio to Sell from Hold citing a lack of upcoming catalysts, as he does not expect any new data to be announced at this year's American Society of Hematology conference to de-risk the hemoglobinopathy programs. While bluebird bio disclosed that all future LentiGlobin trials in transfusion-dependent beta-thalassemia and severe sickle cell disease going forward will use its improved manufacturing process, Piros noted that initial data may not become available until 2018 since those trials are just beginning. Further, the analyst told investors that the lack of catalysts for some time should likely lead to selling pressure on the company's shares. He lowered his price target on the stock to $37 from $42. CLINICAL DEVELOPMENT, REGULATORY PATH DE-RISKED: Conversely, Leerink analyst Michael Schmidt remains bullish on bluebird bio, raising his price target on the shares to $80 from $67 as he sees the clinical development and regulatory path for the company's pipeline products incrementally more de-risked. While development of key product LentiGlobin in transfusion-dependent beta-thalassemia and severe sickle cell disease has been more complex than initially anticipated, the analyst believes bluebird bio is well positioned to overcome remaining technical hurdles. Additionally, Schmidt told investors that he expects updates from ongoing LentiGlobin trials at the upcoming ASH conference. He reiterated an Outperform rating on the shares. IMPROVED OUTLOOK: In a note of his own, SunTrust analyst Edward Nash was also upbeat on bluebird bio, saying that a higher transduction efficiency in LentiGlobin should lead to improved clinical benefit and, therefore, allow the company to target the entire transfusion-dependent B-thalassemia population. Moreover, additional protocol amendments for sickle cell disease will likely have a positive impact on the clinical outcome, Nash added. He also pointed out that he believes bluebird bio is on track in pursuing FDA and EMA approvals for LentiGlobin. The analyst reiterated a Buy rating and $115 price target on the shares. PRICE ACTION: In morning trading, shares of bluebird bio have dropped 6% to $61.31.