H.C. Wainwright retains buy on I-Mab stock despite cutting PT to $8 from $18
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On Monday, H.C. Wainwright reduced the price target for I-Mab (NASDAQ:IMAB) to $8 from the previous $18, while keeping a Buy rating on the stock. The firm’s analyst noted I-Mab’s growth as a robust US-oriented biotech company, despite the recent divestment of its China operations.
The move to divest is seen as a way to streamline investor engagement and shift focus to the potential of the company’s pipeline assets, moving away from concerns such as geopolitical risks and the threat of being delisted from NASDAQ.
I-Mab has plans to initiate a triplet study for uliledlimab combined with chemotherapy and checkpoint inhibitors in patients with advanced non-small cell lung cancer (NSCLC) in the second quarter of 2024. This study is intended as a preliminary step to collect adequate data that may lead to a potential partnership for the program.
Enrollment for a study of uliledlimab, which involves patients from both the U.S. and China with newly diagnosed gastric and esophageal cancer, began in the first quarter of 2024. The study combines uliledlimab with chemotherapy and a checkpoint inhibitor, with the anticipation of data availability by late 2024 or early 2025.
Following the divestiture of its China pipeline products, where it retains an equity stake, H.C. Wainwright has removed the China development of felzartamab, uliledlimab, and eftansomatropin alfa from I-Mab’s valuation.
Nonetheless, value is still seen in the U.S. development of uliledlimab for NSCLC and givastomig for gastric cancer, gastroesophageal junction (GEJ), and esophageal adenocarcinoma (EAC). Additional programs are viewed as “free call options” with the potential for upside to the firm’s thesis. The affirmation of the Buy rating coincides with the adjusted price target of $8.
InvestingPro Insights
Amidst the strategic changes and the focus on advancing its pipeline, I-Mab (NASDAQ:IMAB) presents a mixed financial outlook according to recent data. With a market capitalization of approximately $150.1 million, the company is navigating through a transformative phase. Notably, I-Mab holds more cash than debt on its balance sheet, a positive indicator for the company’s financial health and its ability to fund ongoing research and development without the immediate need for external financing.
Investors may also find solace in the fact that analysts are expecting sales growth in the current year, reflecting optimism in the company’s operational capabilities and market potential. This is particularly relevant as the company prepares to initiate new studies and seeks partnerships for its programs. The revenue growth for the last twelve months as of Q4 2023 was an impressive 112.48%, underscoring the company’s ability to generate increased sales over the period.
However, the stock is not without its challenges. I-Mab is currently trading at a low Price / Book multiple of 0.63, which could be indicative of the market undervaluing the company’s assets relative to its share price. Moreover, the company has not been profitable over the last twelve months, with an adjusted P/E ratio of -0.81, and analysts do not expect it to be profitable this year. This reflects the inherent risks associated with investing in biotech companies that are in the development phase with no guaranteed path to profitability.
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