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Coherus Is a ‘Top Pick’ for COVID-19 Environment, Says Top Analyst
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Coherus Is a ‘Top Pick’ for COVID-19 Environment, Says Top Analyst

Many biotechs have been on hot streaks in 2020, particularly those with the coronavirus on their agenda, as valuations have shot up on the back of urgently needed solutions for COVID-19. But the trend hasn’t been industry wide, leaving out companies whose focus resides in other areas.

Case in point: Coherus BioSciences (CHRS), a commercial-stage biopharma targeting the global biosimilar market. Despite periodic volatility, shares are down 9% in 2020. Looking back to 2019, though, the stock shot up by an impressive 102%. With shares currently trading 38% below the 52-week high, Maxim analyst Jason McCarthy argues CHRS is a “top pick for the COVID-19” environment.

Coherus reported first quarter earnings last week, overall, delivering a positive report. Revenue came in at $116.2 million, although a little below the Street’s call for $119.4 million and down 6% 4Q19, yet still displaying a year-over-year increase of 213.2%. Non-GAAP EPS of $0.67 beat the estimates by $0.20.

With $400 million of cash on the balance sheet, McCarthy argues the company’s financial health will see it through the uncertain COVID-19 environment and will most likely “fuel additional M&A activity.”

Companies hurting from the pandemic’s impact and currently valued at discount prices, are ripe for the taking and should bode well for Coherus’ objective of adding another oncology asset in the near term. 

Additionally, Coherus’ pegfilgrastim biosimilar Udenyca is already the dominant player in its market, increasing its share from 20 to 20% through the quarter. With a bulging pipeline and several launches expected over the next few years, McCarthy is confident Coherus is set up well for further expansion.

The 5-star analyst said, “With the economic uncertainty due to COVID-19, Coherus remains well-positioned with a strong balance sheet, and a fairly insulated market (oncology). We anticipate that Udencya should return to growth after a transient impact in 2Q20, and that M&A activity should help expand the Coherus pipeline, potentially coming with more favorable terms as less secure companies may face greater impact from economic conditions.”

Accordingly, McCarthy has a Buy rating on CHRS shares to go along with a $27 price target. The implication for investors? Upside of 65% from current levels. (To watch McCarthy’s track record, click here)

It appears the rest of the Street sees plenty of upside, too. Based on Buys only – 6, in fact – the analyst community rates Coherus a Strong Buy. The average price target hits $31, and implies potential upside of a healthy 89% over the coming months. (See Coherus stock analysis on TipRanks)

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