Analyst Bullish On Cell Therapy Player Mesoblast, But Cuts Price Target

Wednesday, Mesoblast Ltd MESO FY23 results, with revenues of $7.5 million for FY2023, compared to $10.2 million in FY2022, missing the consensus of $7.97 million.

The company reported narrower EPS loss of $(0.11), beating the consensus of $(0.57).

Citing solid Q4 earnings, Cantor Fitzgerald reiterates the Overweight rating but lowered the price target from $23 to $17

Earlier this month, the FDA issued a complete response letter to Mesoblast's resubmission for remestemcel-L for pediatric steroid-refractory acute graft versus host disease (SR-aGVHD), asking for more data.

The lower price target is driven by a lower probability of success assumptions for MESO's pipeline assets. 

Cantor has updated its model, lowering FY24E and FY25E EPS. The decreases were driven by a pushback on the launch year than previously forecasted.

The analysts Louise Chen, Carvey Leung, Wayne Wu, and Lucas Olson Duffy see a path forward for remestemcel-L, and Mesoblast's late-stage pipeline of cellular drugs for inflammatory diseases is underappreciated.

The pipeline advancements should move the stock higher.

Mesoblast will be required to demonstrate the consistency of its product from both a safety and efficacy standpoint. That said, Mesoblast could achieve, and in some cases has already achieved, advantageous RMAT designation (for regenerative medicines) for more of its products, which could accelerate the development timeline.

Price Action: MESO shares are up 12.60% at $1.61 on the last check Thursday.