Citigroup Upgrades NantKwest, But Finds Six Reasons To Stay On Sidelines

Nantkwest Inc NK's enterprise value has fallen to about $120 million, limiting any potential downside, according to Citigroup. 

The Analyst

Analyst Wendy Nicholson downgraded NantKwest from Sell to Neutral and maintained a $3 price target. 

The Thesis

Apart from the fall in enterprise value, the 10-Q NantKwest filed this week showed that the company is enrolling patients in three clinical trials, bringing its number of ongoing clinical trials to six, Nicholson said in a note. (See the analyst's track record here.) 

Although Citi upped its rating, the firm still remains sidelined due to NanKwest's history of missing timelines, the analyst said.

Also, Nicholson said the NANT vaccine studies include several proprietary agents not owned by the company.

Many of the company's trials are run at a single center that has strong ties to the Nant ecosystem of entities, Nicholson said. 

Citing the 10-Q, the analyst said the company has seen increases in manufacturing costs and "sporadic decreases in manufacturing yield of both haNK and taNK cells."

NantKwest's corporate transparency is "relatively low," Nicholson said. 

The Price Action

Nantkwest shared have declined about 27 percent year-to-date. The stock was trading down 2.45 percent to $3.19 at the time of publication Friday. 

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