iBio stock forecast 2021: is this former Covid darling heading to penny territory again?
16:31, 9 March 2021
Once categorised as a potential “underdog” in the race to push through a Covid-19 vaccine, iBio’s share price has been dropping like a rock lately as big pharma names have already won the challenge – leaving the firm with little to show to those who were eagerly awaiting a “Eureka” moment from the Texas-based biotech company.
With an accumulated 81 per cent loss since the July 2020 peak, those who were caught holding a bag of iBio shares back then are probably wondering if those brighter days will ever come back for this former penny stock.
With that in mind, the following iBio share price forecast will dig deeper into the firm’s financial situation to see if there is any value left for the company now that a feasible Covid-19 vaccine seems like a long – and highly improbable – shot.
iBio stock analysis:
With sales of roughly $2 million per year during the past two fiscal years it is quite difficult to understand how this company has managed to reach – and hold – a market capitalisation of around $300m, especially now that getting a vaccine approved by the FDA seems as difficult and complex as ever.
That said, even though that number appears to be heavily stretched, it becomes rather small when compared to the $2bn valuation the market gave the firm at some point in July last year when it emerged as a potential up-and-coming vaccine developer.
Nonetheless, the firm seems to have capitalised on this positive momentum, as it managed to raise as much as $35 million in equity from investors in early December at around $1.2 per share – a price point that seemed quite decent compared to those July highs but that is still remarkably high after one looks at the firm’s fundamentals.
iBio has taken advantage of this capital raise to appoint no less than eight new officers including a chief operating officer, a chief scientific officer, and a chief financial & business officer – named only a few days ago.
All in all, iBio claims to have expanded its staff by around 11 per cent, with around 53 employees currently running the firm.
Meanwhile, during the fourth quarter of 2020, iBio managed to trim its net loss to $8m per share – up from a previous $15.6m loss the firm reported during the same period a year ago.
The company had a total of $107m in cash and equivalents by the end of December – which supports at least a third of its current valuation. Total assets finished the three-month period at $145m while the firm’s long-term debt is $32m.
So, with cash and cash equivalents accounting for at least a third of the firm’s market capitalisation, what else is there that can justify the other two thirds of iBio’s value?
According to the firm’s website, there are currently six products in the company’s pipeline yet only two of them have moved past the preclinical stage.
One of these is a vaccine for classic swine fever, which is currently entering the clinical development stage. Although this is the most advanced treatment being developed by iBio at the moment, it still has to pass the four stages of clinical research mandated by the US Food and Drug Administration (FDA) before the treatment can be launched to the market.
In this context, it seems that market participants are being fairly optimistic when drafting their iBio stock forecast, as they are probably counting on the approval of at least one of these candidates – most of which are probably years away from getting to that point – while the firm’s research and CDMO services are not producing any meaningful growth to the company’s revenues or at least not to justify a $200 million valuation.
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iBio stock forecast 2021
iBio’s stock price is currently submerged in a strong downtrend that started back on February 10, only a few days before the company reported its financial results for the fourth quarter of 2020.
This downtrend has ended up forming a pronounced falling wedge that could lead to a short-term reversal in the price trend. However, given that the company’s fundamentals are so weak compared to the stock’s total market capitalisation, chances are that this bear market could last much longer than what this technical setup suggests.
In this regard, if the market were to lower its expectations about the firm’s financial performance in the near future while valuing the company closer to its fundamentals, chances are that the stock price could re-enter penny territory soon.
One might argue that the firm’s FastPharming system could have some value as an intangible asset, yet the company’s revenues have not yet shown the profit-making potential of this technology.
iBio stock: buy or sell?
Only two analysts seem to be covering iBio’s stock at the moment – Cantor Fitzgerald and Alliance Global Partners.
Both of them are currently rating the stock a buy, yet Alliance lowered its 12-month iBio stock predictions about four months ago from $3.1 to $2, according to data from MarketBeat.
Cantor initiated coverage only a month ago and back then the analyst in charge – Kristen Kluska – indicated that the firm remains “under the radar” and that its capabilities have not been fully recognised by investors just yet.
In this regard, the analyst emphasised that once the firm provides more data about the advance of its pipeline, such developments “could drive significant upside”.
Looking forward, popular analytical service Walletinvestor is extremely bullish about iBio stock forecast 2025. They give a $2.226 median price target for the next 12 months, considering iBio an “awesome” long-time investment. According to their iBio stock outlook, the stock’s price will rise up to $4.033 in a 5-year period.
Bottom line
Even though iBio has stepped outside penny territory for now, there are arguably no signs that the business has become one with a justifiable $300m valuation.
So, will iBio stock go up in 2021? Analysts seem to be particularly bullish about this stock despite the absence of material data that supports those claims, which could reflect that they probably have a much deeper understanding of the potential marketability of the firm’s CDMO solutions or that they are just assigning remarkably high odds to the approval of at least one treatment within the firm’s pipeline.
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