The major U.S. equity-indexes are hovering around all-time highs, and a question that frequently pops up these days, is whether some companies’ valuations might be overstretched.
However, some operate at the opposite end of the spectrum, and could yet offer investors untapped opportunities.
Selvaraju rates SRNE a Buy along with a $30 price target, which implies a 275% upside from current levels. (To watch Selvaraju’s track record, click here)
So, what’s behind the optimistic outlook?
Well, for starters, Sorrento has a stake in two cell-based immunotherapy companies that could “drive value in Sorrento shares over the coming months.”
One is Celularity, a clinical-stage cell therapeutics company focused on cellular medicines for cancer, infectious diseases, and degenerative diseases. Celularity is expected to go public later this year via a SPAC merger with GX Acquisition Corp.
The merged company’s equity value following the transaction’s closure will land at roughly $1.7 billion. Selvaraju estimates Sorrento’s position should be worth in the $200 million region.
The second company is NantKwest, which recently signed a deal to merge with ImmunityBio. The transaction is expected to close in 1H21. Sorrento owns roughly 8.2 million shares of the clinical-stage immunotherapy company. These are currently worth around $121 million, going by NantKwest’s recent share price.
Additionally, the analyst highlights Sorrento’s “burgeoning portfolio of assets spanning three distinct therapeutic areas (non-opioid pain management, oncology and COVID-19).”
In fact, on the Covid-19 front alone, Sorrento has taken a broad-based approach and has a long list of diagnostic, prophylactic and therapeutic offerings in the pipeline, with “updates likely to come fast and furious.”
These include two rapid detection tests; COVI-STIX, for which the company filed for Emergency Use Authorization (EUA) in the U.S. in December, and COVI-TRACE, which Selvaraju claims could come in handy at any mass gathering event.
“We believe that the incentive to facilitate the large-scale and indeed ubiquitous deployment of the COVI-TRACE test is extremely high and governments worldwide may seek to implement this in their respective regions,” the 5-star analyst opined.
Other Covid-19 candidates include COVIGUARD – a SARS-CoV-2 neutralizing antibody, COVI-AMG – an affinity-matured version of the COVIGUARD neutralizing antibody, a neutralizing antibody cocktail named COVI-SHIELD and COVIDTRAP, an ACE2 receptor decoy, intended to imitate the mammalian ACE2 receptor that acts as the primary portal for the SARS-CoV-2 virus to penetrate human cells.
It has been relatively quiet when it comes to other analyst activity. In the last three months, only 2 analysts have issued ratings. However, as they were both Buys, the word on the Street is that SRNE is a Moderate Buy. Based on the $25.50 average price target, shares could climb 219% higher in the next twelve months. (See SRNE stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.