Why AbCellera Biologics Is Still A Buy Despite Dropping Royalties: Analyst On Long-Term Prospects

Benchmark analyst Robert Wasserman reiterated a Buy rating on AbCellera Biologics Inc. ABCL, lowering the price target to $12 on reduced valuations for other drug discovery stocks.

AbCellera's shares have declined recently following peaks during the pandemic-fueled boom as royalties from sales of R&D partner Eli Lilly And Company's LLY COVID-19 antibody therapeutics have disappeared, the analyst notes. 

The analyst added that beyond the two already marketed COVID-19 antibodies partnered with Eli Lilly, AbCellera has seven molecules in the clinical pipeline.

The analyst noted that the long-term prospects for new partnerships and royalty revenues look positive.

Investors can also look for more partnered programs (of the 177 currently) to enter clinical trials in the future, as well as new partners signed up in the near- and long-term, Wasserman adds.

For Q3, the analyst estimates EPS of ($0.11) loss, with revenues of $11.2 million.

Wasserman highlighted the company's signing of a $701 million (CDN) co-investment in May with the Governments of Canada and British Columbia to build new biotech infrastructure to develop antibody-based medicines.

For 2023, the analyst expects AbCellera to post revenues of $45.2 million, down from $485.4 million in 2022 (which included $443.4 million in COVID-related royalties), and a net loss of $(134.6) million or $(0.47) per share.

Price Action: ABCL shares are trading lower by 5.69% to $5.47 on the last check Thursday.