[Updated 3/26/2021] CRSP Update
Last month, we talked about why investors may want to wait for better levels to enter into the CRSP stock. Since then, the stock has seen a correction of over 28%. There has been no major development to cause any panic among investors. But the large 5x rally from $34 in March 2020 to $160 last month likely resulted in profit booking at higher levels. While the stock is still up 3x from March 2020 lows, the levels now appear attractive to enter for long-term investors.
Looking at the recent decline, the 14% drop for CRSP stock over the last ten days compares with a 1% drop seen in the broader S&P 500 index. Looking forward, based on our machine learning analysis of trends in the stock price over the last few years, we believe that there is a 59% chance of a rise in CRSP stock over the next month (twenty-one trading days). Out of 197 instances in the last 4 years that CRISPR Therapeutics AG stock saw a 5-day decline of 7.3% or more, 112 of them resulted in CRSP stock rising over the subsequent one month period (21 trading days). This historical pattern reflects 112 out of 197, or about 59% chance of gain in CRSP stock over the coming month. See our analysis on CRISPR Stock Chances of Rise for more details.
[Updated 2/17/2021] Buy Or Fear CRISPR Stock After Q4?
A few months back we talked about why the rally in CRSP stock may continue given the positive developments around CTX001, an experimental gene therapy for people with sickle cell disease and transfusion-dependent beta thalassemia. CRSP stock extended its rally from levels of around $107 in mid-November 2020 to $161 currently. Also, the stock has rallied a stellar 5x from levels of $34 in late March 2020 – when markets made a bottom following the spread of Covid-19. Now, can the rally continue? We don’t think so. Though the CRSP stock has momentum on its side, given the strong 5x rally in less than a year, investors may want to wait for better levels to enter into the stock.
Looking at the recently announced Q4 numbers, revenues of $0.4 million were down 99.5% y-o-y and missed the consensus by $2.2 million. Note that 2019 revenues were higher due to collaboration revenues from Vertex
[Updated 11/17/2020] CRISPR Stock Rally
Despite a large 3x rise since the March 23 lows of this year, at the current price of around $107 per share we believe CRISPR Therapeutics stock (NASDAQ
Some of the 4x rise of the last 2 years is justified by the roughly 7x growth seen in CRISPR’s revenues from 2017 to 2019, while its revenue per share grew 5x to $5.32 in 2019, compared to $1.02 in 2017. This mismatch can be attributed to a 36% uptick in total shares outstanding due to share issuances. Despite the growth in RPS, the company’s P/S Multiple saw a contraction. We believe the stock is likely to see upside despite the recent uptick and the potential weakness from a recession-driven by the Covid outbreak. Our dashboard, ‘What Factors Drove 350% CRISPR Therapeutics Stock between 2017 and now?‘, has the underlying numbers.
CRISPR’s P/S multiple changed from 23x in 2017 to 11x in 2019. While the company’s P/S is 20x now (based on trailing RPS), there is a potential upside given the expected growth in RPS over the coming years, as we discuss below.
So what’s the likely trigger and timing for upside?
There’s not much to look at CRISPR’s Q3 sales of $0.2 million, which compares with $212 million in the prior year quarter, which included collaboration revenues from Vertex Pharmaceuticals in connection with co-development of CTX001, an experimental gene therapy for people with sickle cell disease and transfusion-dependent beta thalassemia. So with barely any revenues this year, what’s the buzz around CRISPR stock, given it has rallied 3x over the recent months? It all boils down to its pipeline. The company is working to mass-produce cell therapies that will work in any person. Currently, cell therapies are manufactured from cells derived from human donors or from a patient’s own cells, making the process lengthy and cumbersome to develop the medication. If CRISPR is successful in its approach, it would mean off-the-shelf cell-based medicines developed using cells from diverse group of donors. The company’s in-house CTX110 therapy for non-Hodgkin’s lymphoma has seen positive results from phase 1 trials. The CTX001, which the company is co-developing with Vertex has received Rare Pediatric Disease designation from the U.S. FDA. Overall, CRISPR stock’s value is something to be looked at purely from its potential pipeline. CTX110 alone if approved could garner sales over $1.5 billion. The estimated revenues for 2020 and 2021 are $2.5 million and $12.7 million.
CRISPR is a high growth stock and it comes with a high risk as well. There could be a case where the therapies in CRISPR’s pipeline aren’t found effective. Also, we don’t know the timeline of when the products will be ready to be sold. That said, investors willing to be patient will likely be rewarded with any positive data from clinical trials for these therapies.
What if you’re looking for a more balanced portfolio instead? Here’s a high quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently.