JPMorgan Downgrades bluebird bio (BLUE) to Neutral

JPMorgan analyst Eric Joseph downgraded bluebird bio (NASDAQ: BLUE) from Overweight to Neutral.

The analyst comments "We’re downgrading BLUE shares to N from OW following the 2Q results update. Of note, product sales of $16.1M missed street estimates by ~$6M (BBG consensus estimate of $22.6M; JPMe: $17.4M), implying 8 Zynteglo and 1 Skysona treated patients in the quarter. Despite the company noting steady commercial progress across the cell therapy portfolio in 2Q, FY24 commercial guidance was downwardly revised to ~85 patient starts across the cell therapy franchise (the lower end of prior 85-105 patients starts guidance), due mainly to observed advanced scheduling from patients expected to carry into FY25. Additionally, first anticipated revenue recognition of Lyfgenia slid incrementally from 3Q to between 3Q and 4Q24, with total product revenue expected to be sequentially lighter in 3Q before rebounding in 4Q. Indeed, we see sentiment being further hurt by the aggregate commercial outlook into 2H24 being more encouraging than that exiting 1Q. Perhaps more impactful to shares near term, however, are the revised terms under the Hercules loan agreement, which introduced new capital raising requirements to remain eligible for the 2nd and 3rd additional $25M debt tranches over the next four quarters. With follow-on equity being the most readily available path to this end, in our view (unclear how additional non-dilutive options would be secured without undermining the existing Hercules agreement), we see BLUE shares under increasing dilutive pressure near term. Combined with flat quarterly opex /cash spend expectations and limited visibility to product gross margin / profitability near to mid-term, we see this dilutive headwind continuing throughout 2025. In view of the challenging balance sheet outlook and likely downward forecast revisions to Street models, we anticipate BLUE trading range-bound over the mid-term, prompting our move to the sidelines with a Neutral rating."

For an analyst ratings summary and ratings history on bluebird bio click here. For more ratings news on bluebird bio click here.

Shares of bluebird bio closed at $1.06 yesterday.

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