Mesoblast Limited (MESO) PT Lowered to $12 at Dawson James, "Focus Remains on BLA Filing for remestemcel-L"

Dawson James analyst Jason Kolbert lowered the price target on Mesoblast Limited (NASDAQ: MESO) to $12.00 (from $16.00) while maintaining a Buy rating, following the company's Q3 report.

The analyst comments: "Mesoblast presented results for the third quarter, the period ending March 31, 2022. The company’s press release highlights a message of cash conservation – with the company spending $15.5M in the quarter which is down from the same period a year ago ($25M). The company has approximately a year of capital remaining ($77M) on its balance sheet. Royalties from TEMCELL in Japan fell from $2.4M in the prior quarter to $1.9M. Our focus remains on the BLA filing for remestemcel-L in pediatric GvHD.

Our valuation methodology begins with our projected revenues from our product models, which are adjusted by a probability of success or risk factor which ranges from 30% to 50%. We assume future capital raises and adjust our projected outstanding shares accordingly. We then apply assumptions for the timing of approval, launch dates, and product attributes to estimate revenues. These estimates feed into our income statement through the year 2030. The result of these projections is then fed into our income statement projections. Our price target is derived from an equal-weighted average of free cash flow to the firm (FCFF), discounted EPS (EPS), and sum-of-the-parts (SOP) models. A 30% discount is then applied and rounded to the nearest whole number to derive our price target. A higher risk rate of 30% is applied (vs. 15% or 10%) since Mesoblast is a microcap company with drug candidates in clinical trials that have yet to gain FDA approval."

By Vlad Schepkov

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