To buy when others seemingly can't sell fast enough takes a lot of
guts (and other less family-friendly attributes), but it can be one of
the best ways to exploit Wall Street shortsightedness. Small-cap
oncology immunotherapy biotech Celldex (CLDX)
has gotten swept up in this biotech bubble-popping, even though the
data from the company has generally been positive and supportive of the
idea that this company has some promising high-potential drugs.
On
a risk-adjusted basis, I calculate a fair value of $29 per share for
Celldex, suggesting significant upside from today's level. Readers have
to consider two key risks here. First, there is the ever-present biotech
risk that Celldex's drugs will fail in advanced clinical studies and
never make it to market. Second, there is a growing risk that investors
are cycling out of biotech and may no longer be willing to use the same
long-term revenue multiples and discount rates. A true rout in the
biotech space could take these shares down another 50% without any bad
news from the company, but investors who can stomach that risk as the
price of admission to a potential winner should look further into this
story.
Read the full article at Seeking Alpha:
A Sharp Pullback In Celldex Could Be A Window Of Opportunity
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