bluebird bio, Inc. (BLUE) operates as a biotechnology company that researches, develops, and commercializes transformative gene therapies for severe genetic diseases.
In August, BLUE announced the U.S. Food and Drug Administration (FDA) approval for ZYNTEGLO, also known as beti-cel, a one-time gene therapy custom-designed to treat the underlying genetic cause of beta‑thalassemia in patients who require regular red blood cell (RBC) transfusions.
Following the FDA approval, the company released details of its U.S. commercial infrastructure to support rapid access to ZYNTEGLO, which includes contract offerings and a comprehensive patient support program.
The stock has declined 38.5% over the past year and 29% year-to-date. However, it has gained 3.8% over the past month to close its last trading session at $7.09.
Here are the factors that could affect BLUE’s performance in the near term:
Stretched Valuations
In terms of its forward EV/Sales, BLUE is trading at 17.89x, 326.8% higher than the industry average of 4.19x. The stock’s forward Price/Sales multiple of 14.65 is 213.9% higher than the industry average of 4.67.
Negative Profit Margins
BLUE’s trailing-12-month ROE of a negative 87.14% compare to the industry average of a negative 38.55%. On top of it, its trailing-12-month ROTC and ROA of a negative 36.33% and a negative 103.59% are lower than their respective industry averages of a negative 21.38% and 29.73%.
Weak Past Growth Story
BLUE’s revenue has declined at a 52.4% CAGR over the past three years and a 25.6% CAGR over the past five years. Its tangible book value and total assets have decreased at CAGRs 52.3% and 34.3% over the past three years.
POWR Ratings Reflect Bleak Prospects
BLUE’s POWR Ratings reflect this bleak outlook. The stock has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
BLUE has a Sentiment grade of F in sync with Wall Street analysts’ expectations of a 3.7% downside in its stock price. The stock also has an F grade for Stability, consistent with its five-year monthly beta of 1.16.
BLUE has a D grade for Quality, consistent with its negative profitability margins.
In the 398-stock Biotech industry, it is ranked #294. The industry is rated F.
Click here to see the additional POWR Ratings for BLUE (Growth, Value, and Momentum). View all the top stocks in the Biotech industry here.
Bottom Line
The commercialization of ZYNTEGLO is expected to boost BLUE’s revenues. However, the company’s weak past revenue growth and profitability are concerning. With Wall Street analysts expecting a downturn in its stock price in the near term, BLUE might be best avoided now.
How Does bluebird bio, Inc. (BLUE) Stack Up Against Its Peers?
While BLUE has an overall POWR Rating of D, one might consider looking at its industry peers, Vertex Pharmaceuticals Incorporated (VRTX) and Biogen Inc. (BIIB), which have an overall A (Strong Buy) rating, and Genfit S.A. (GNFT) and Corcept Therapeutics Incorporated (CORT), which have an overall B (Buy) rating.
BLUE shares were trading at $6.65 per share on Friday morning, down $0.44 (-6.21%). Year-to-date, BLUE has declined -33.43%, versus a -18.35% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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