Bluebird Bio Upgraded At Morgan Stanley; Firm Sees 'Innovation At A Discount'

• bluebird bio Inc BLUE shares are down 42 percent in the last three months and are trading significantly below their 52-week high of $197.35.
• Morgan Stanley’s Mathew Harrison upgraded the rating on the company from Equal-Weight to Overweight, while maintaining a price target of $143.
• The company’s stock fully reflects competition in sickle cell disease, and there is scope for upside from strong data readouts, Harrison mentioned.

Bluebird Bio’s shares declined nearly 40 percent between September 18 and September 30, versus a 15 percent decline in BTK during the same period. Analyst Mathew Harrison said that this offers an attractive entry point for investors.

The analyst mentioned that the company’s current stock valuation heavily discounts any potential competition in sickle cell disease He added that the company’s platform, though still in the initial stages, has proven results.

Fears related to drug pricing have exerted significant pressure on gene therapy stocks. Harrison added, however, that gene therapy did not appear to be “an industry targeted over pricing given that these drugs would potentially offer cures and their total cost can be spread out over multiple years.”

Bluebird Bio’s shares may appreciate after the release of Data at ASH in early December. “We expect long-term follow-up on all patients, plus at least one or two new sickle cell disease patients. We would expect to see significant increases in hemoglobin similar to the first sickle cell disease patient,” the Morgan Stanley report mentioned.

Although the company’s CAR-T and gene editing programs are potential upside drivers, it is too early to value them, Harrison noted.