Analyst Doubts Bluebird Bio Shares — Up 200% In 2017 — Can Fly Much Higher

Bluebird bio Inc BLUE's stock has soared more than 200 percent since the start of 2017, with notable strength coming after the company released impressive data results at the American Society of Hematology conference.

The Analyst

Maxim Group's Jason McCarthy downgraded bluebird's stock rating from Buy to Hold with an unchanged $200 price target.

The Thesis

There should be little doubt that bluebird has become a "significant" player in both the gene therapy and CAR-T spaces, McCarthy said in the downgrade note. (See McCarthy's track record here.) 

During the ASH conference, the company "did not disappoint" and reported data that is "great" for LentiGlobin in both beta thalassemia and sickle cell disease, and bb2121 CAR-T in multiple myeloma, McCarthy said. 

With the stock closing in at $200 per share with a $9 billion valuation, investors may want to take a step back and reexamine their thesis on the stock, the analyst said. The valuation is similar to what Kite's stock was trading at prior to being acquired by Gilead Sciences, Inc. GILD for $12 billion, McCarthy said. While this would suggest room for some additional upside, it may not be enough to justify a Buy rating, he said. 

"BLUE shares have had a good run through ASH, but the next "significant" catalysts probably don't arrive until spring," the analyst said. "As such, we opt to step down to a Hold rating, from Buy, as the current closing price is close to our price target of $200."

Price Action

Shares of bluebird were trading lower by 2 percent ahead of Wednesday's market open.

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