CRISPR Therapeutics (CRSP) has had a fantastic 2020, more than doubling in value over this period. This biotech company uses gene therapy to remedy genetic mutations with the overarching goal of treating and curing diseases, diabetes, cancer, and hemoglobinopathies. If you own CRSP, you are undoubtedly wondering whether now is the time to sell. Alternatively, those who have been sitting on the sidelines are likely pondering whether there is still time to get in on CRSP before it plateaus or slides, possibly due to profit-taking. Let’s take a look at whether CRSP is still a buy.
CRSP Might Take Some Time to Double Again
It is going to take some time for CRSP’s gene-editing approach to make significant headway in curing and treating illnesses. CRSP is attempting to treat both single-gene disorders and those caused by disorders in multiple genes. Some of CRSP’s programs have reduced tumor sizes and spurred positive patient responses that lasted several months. In short, it is clear that CRSP’s technology has the power to heal. However, it might take several more years or even longer for this approach to produce its intended results.
Instead of editing genes, the better approach might be to turn gene expressions on/off. Such gene-editing and activation to alter cellular functionality will be possible by delivering treatments through synthetic mRNA. The question is what CRSP’s stock will do in the meantime, as investors patiently wait for the company’s technology to evolve and eventually prove successful.
Biotech stocks tend to be volatile, especially in the short-term. This is why CRSP should not be viewed as a short-term play. Only those willing to wait several years or longer for the big payoff should consider establishing a position in CRSP.
CRSP by the Numbers
CRSP is currently priced around $15 below its 52-week high of $163.56. The stock’s 52-week low is a mere $32.30. Analysts have set an average price target of $136.15, indicating a potential 7% downside. However, there is no guarantee this prediction will prove accurate. Of the 16 analysts who cover the stock, nine have it as a “Buy,” five as a “Hold,” and two as a “Sell.”
CRSP has “A” grades in the POWR Ratings Peer Grade and Trade Grade components, along with a “B” grade in the Buy & Hold Grade component. CRSP is ranked in the top 50 out of nearly 400 publicly traded companies in the Biotech industry. The stock’s year-to-date price return is 144.43% and has a three-year price return of 676.58%.
If you do your due diligence researching CRSP before investing in the stock, you will find some red flags. CRSP currently lacks a source of recurring revenue. The company is in the red, and executives have not established a timetable for transitioning to the black. In fact, it will likely take at least a couple of years for CRSP to reach profitability. Furthermore, it is concerning that a non-Hodgkin’s lymphoma patient who was provided with an elevated dose of CRSP’s CTX110 in a recent trial passed away. In other words, CRSP has its work cut out in the quest to develop truly safe gene therapies and eventually reach profitability.
CRSP: Buy, Sell, or Hold?
There is no doubt gene editing has the potential to alter the treatment of chronic conditions dramatically. Investors are advised to continue paying close attention to CRSP’s pipeline. If it turns out the company’s innovative treatment approaches prove safe and efficacious, there will be that much more money to be made through partnering and licensing. After all, the company’s drug development alliance with Vertex Pharmaceuticals (VRTX) has generated $77 million of revenue in the past year alone.
Add in the fact that CRSP has minimal debt along with nearly $1.5 billion in cash, and there is even more reason to feel bullish about CRSP’s future. If you are a patient investor willing to wait upwards of several years for a potentially large return, you could consider adding CRSP to your portfolio today. However, if you are looking for an immediate return, CRSP probably isn’t the best stock for you.
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CRSP shares rose $1.07 (+0.72%) in premarket trading Friday. Year-to-date, CRSP has gained 147.93%, versus a 16.94% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...