As investors look for undervalued assets amidst the broader market uncertainty, penny stocks offer potential opportunities for high-risk, high-reward plays. While these volatile, low-priced names are best suited for investors with a healthy appetite for risk, buying and holding high-quality penny stocks over the long haul can result in outsized gains for patient investors.
AbCellera Biologics (ABCL), a niche player in the biotech industry, is one name worth keeping on your penny stock watchlist after the company's CEO scooped up shares through his holding company. Additionally, this low-dollar stock has some deep-pocketed fans, as billionaires have also diversified their portfolios by investing in AbCellera Biologics. With big money placing their best on the biotech, it's a significant vote of confidence in the company's long-term growth prospects.
For investors seeking out opportunities where the market may be overlooking a company's potential growth trajectory, here's what you need to know about ABCL.
About AbCellera Stock
Valued at a market cap of $714.5 million, AbCellera Biologics (ABCL) is a biotech company specializing in antibody drug discovery and development. The company uses its proprietary technology platform to accelerate the identification and development of novel antibody therapies so that drug companies can develop drugs to prevent and treat diseases.
By integrating advanced artificial intelligence (AI) and machine learning with high-throughput screening, AbCellera aims to streamline the drug discovery process, making it more efficient and effective. This innovative approach positions AbCellera at the forefront of the biotechnology sector, with the potential to significantly impact the development of new treatments for several diseases.
AbCellera stock is down by 56% over the past 52 weeks, and has pulled back 60.5% from its annual high of $6.05, set in January. However, this significant pullback presents a potential buying opportunity for astute investors looking to capitalize on the dip.
How Did AbCellera Perform in Q2?
On Aug. 6, the biotech firm reported its Q2 earnings for fiscal year 2024, where it announced revenue of $7.3 million, missing estimates by $2.7 million and marking a 30% decrease year-over-year (YOY). This decline was primarily due to lower research fees, which fell from $9.8 million to $5.5 million, although this was somewhat offset by milestone payments of $1.5 million.
The company also reported increased operating expenses, particularly in research and development (R&D) and general and administrative (G&A) costs. R&D expenses rose from $36.5 million to $40.9 million, reflecting continued investment in program execution and platform development. G&A expenses increased from $15.5 million to $20.2 million. As a result, AbCellera recorded a net loss of $36.9 million for the quarter, wider than its $30.5 million net loss in Q2 2023.
Despite these challenges, AbCellera maintains a strong liquidity position, with $697.6 million in cash, cash equivalents, and marketable securities, supplemented by approximately $220 million in available non-dilutive government funding.
On an adjusted basis, AbCellera's EPS edged past analysts' estimates with a loss of $0.13, slightly wider than a loss of $0.11 last year.
Insider Buying on ABCL Stock
Following the recent earnings report, AbCellera CEO Carl Hansen significantly increased his stake in the company by purchasing 283,516 shares at $2.61 each on Aug. 29, totaling approximately $739,977. This purchase, made through Hansen's Thermophylae holding company, highlights his optimistic outlook on AbCellera's future, and bumped up his stake in the company to 19.0338%.
Moreover, several hedge funds have actively traded AbCellera shares this year. The Baker Brothers hold shares worth $81 million, while Mike Rockefeller of Woodline Partners just added a small stake during Q2.
AbCellera Expands Influence Through Strategic Partnerships
AbCellera has bolstered its reputation in the biotech industry through strategic partnerships. In March 2024, the company initiated a collaboration with Biogen to discover therapeutic antibodies targeting neurological conditions. This partnership aims to develop biotherapeutics capable of crossing the blood-brain barrier, a significant hurdle in treating neurological diseases.
In July 2024, AbCellera announced an expansion of its partnership with Eli Lilly (LLY) to further enhance their ongoing efforts to discover and develop therapeutic antibodies. This extension builds on a successful four-year research partnership with Eli Lilly, encompassing eight targeted programs selected by the company. Initially, this collaboration led to the development of COVID-19 antibody therapies, which received emergency use authorization from the FDA.
This broadened collaboration now encompasses various areas, including immunology, cardiovascular disease, and neuroscience. Under the expanded agreement, Eli Lilly will spearhead the development and commercialization of the antibodies identified.
What's the Analyst Forecast for AbCellera Stock?
Analysts are quite bullish on the prospects for AbCellera stock, with a consensus rating of “strong buy.” Out of 9 analysts in coverage, 8 have given it a "strong buy," while only one has given a “hold” rating.
The bullish group has set a mean price target of $13.38 for the next 12 months, which implies an ambitious 459% premium over current levels. Furthermore, the stock's Street-high estimate is $28.
On the date of publication, Nauman Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
