On Monday, Mesoblast (NASDAQ:MESO) Limited (MSB:AU) (NASDAQ: MESO) experienced a shift in stock rating as Jefferies moved its stance from Buy to Hold. The investment firm has adjusted the price target for the biopharmaceutical company to AUD2.30, an increase from the previous target of AUD1.10.
According to InvestingPro data, MESO has shown remarkable momentum, delivering a 577% return over the past year and currently appears undervalued based on comprehensive Fair Value analysis. This change comes in the wake of the U.S. Food and Drug Administration's (FDA) approval of Mesoblast's drug Ryoncil for treating pediatric patients with steroid-refractory acute graft versus host disease (SR-aGVHD).
The FDA's nod for Ryoncil targets a potential market of approximately 375 pediatric patients annually within the United States. However, Jefferies notes the possibility for broader use in adults, contingent on the success of forthcoming adult trials.
With a market capitalization of $1.85 billion and analyst price targets ranging from $15 to $30, InvestingPro subscribers can access detailed valuation metrics and 12 additional ProTips for deeper analysis. The firm maintains its expectation that full U.S. reimbursement approval for Ryoncil will be granted at the start of the fiscal year 2026.
The recent surge in Mesoblast's share price has prompted Jefferies to adjust its rating. The firm's analyst cited the stock's appreciation as the reason for the transition from a Buy to a Hold rating, indicating a more cautious stance on the stock's immediate upside potential.
The upgraded price target reflects Jefferies' recognition of the drug's approval and its potential market impact. Nonetheless, with the current valuation, the firm suggests that investors maintain their positions without increasing their stake in the company at this time.
Mesoblast's progress with Ryoncil marks a significant milestone in its efforts to address unmet medical needs in the field of immune-mediated diseases.
The updated rating and price target by Jefferies provide investors with a revised outlook on the company's stock performance following the FDA approval. InvestingPro's comprehensive analysis shows the company maintains a moderate debt level with a current ratio of 1.18, though it operates with weak gross profit margins.
Discover the complete financial health assessment and detailed Pro Research Report available for MESO and 1,400+ other stocks on InvestingPro.
In other recent news, Mesoblast Limited has been in the spotlight following the FDA's approval of Ryoncil, the first-ever FDA-approved mesenchymal stromal cell (MSC) therapy.
This authorization is a significant milestone for the company, as it addresses a critical need for approximately 1,500 American children who undergo allogeneic stem cell transplant (ASCT) annually. Piper Sandler, in response to this development, upgraded Mesoblast's price target to $15.00 from $11.00, maintaining an Overweight rating on the stock.
The firm projects Ryoncil to generate revenues of $12 million in 2025, with expectations of growth to $35 million in 2026, and a significant increase to $150 million by 2032. In addition to these developments, Mesoblast recently disclosed its Annual Report to shareholders, providing insights into the company's financial performance and strategic directions.
The company ended the fiscal year 2024 with a cash balance of $63 million and a debt obligation of approximately $114 million. Mesoblast is planning to initiate a single-arm Phase III confirmatory trial of Ryoncil in third-line adult aGVHD, with the recent FDA approval making the company eligible to borrow up to $50 million in convertible debt to further its business objectives.
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