Wedbush Downgrades Cerus From Outperform To Neutral

• Cerus Corporation CERS shares have appreciated 26.97 percent over the past one month, reaching a high of $6.59 on December 16.
• Wedbush’s Zarak Khurshid has downgraded the rating on the company from Outperform to Neutral, while maintaining the price target at $6.50.
• The downgrade follows the strong performance of the stock over the past six months, driven by improving sentiment due to the recent U.S. contracting momentum.

According to the Wedbush report, “Although difficult to quantify, we believe investors may already be pricing in potential announcement of an American Red Cross (ARC) contract.”

Analyst Zarak Khurshid believes that Cerus “continues to engage in constructive dialogue with the ARC and the recent OneBlood contract may accelerate ARC’s decision for competitive reasons.”

Khurshid believes that although little is known about the potential timing, scope and precedents of the contract, a master agreement could be signed in the near term.

Khurshid also believes that the consensus revenue forecasts for 2016 are too high and assume a significant acceleration in 2H16.

“Given CERS’s heavy exposure to the Euro and further US dollar strengthening plus low visibility into the US revenue story, we maintain our conservative revenue view,” the report added, while mentioning that conversion of U.S. contracts into significant revenues “and/or better all-around commercial execution” could make the analysts more bullish.