Investors in Biotech company Ocugen Inc (NASDAQ:OCGN) have had a rough November so far. Especially those who bought shares as OCGN began a rally in the last week of October. OCGN stock spiked to a $15.67 close on November 2, then dropped sharply.
Now trading at around $7.71, shares are worth less than half what they went for two weeks ago. What’s going on here, and does the November selloff present an opportunity? Or is the volatility a sign that potential investors should keep their distance?
OCGN is a Gene therapy company with a focus on curing genetically inherited eye diseases. It partnered with India’s Bharat Biotech in the commercialization of a Covid-19 vaccine, Covaxin. It also reached meme stock status early in 2020 while trading as a Penny stock through most of 2020. Now it’s a performer — albeit a volatile one — that has posted growth of over 300% so far in 2021, despite its November downturn.
In Portfolio Grader it’s a “B” rated stock. OCGN stock covers a lot of ground. It has potential to deliver big returns, but it’s not without risk. Here’s what’s been going on with OCGN over the past two weeks.
The Big Rally
Ocugen shares have spiked dramatically several times this year — primarily in February, May and again to start off November. Those rapid moves (in February, OCGN stock popped 201% in a single day) followed by steep drops have largely been driven by retail investors. That’s the meme stock factor. Those investors haven’t been driven by advances in the company’s gene therapy for macular degeneration. They’re reacting to news about Covaxin, the Covid-19 vaccine Ocugen is commercializing in partnership with Bharat Biotech.
Since last November, the Covid-19 vaccine market has been dominated by several companies, but there is still a huge global market for the shots. Many countries have barely begun vaccinations, and even in those where there has been significant progress, the vaccination of children is just beginning.
The latest rally in OCGN stock started near the end of October and saw shares jump in value by over 60% over the course of a week.
The primary catalyst behind the rally was anticipation that the World Health Organization (WHO) would issue an emergency use listing (EUL) for Covaxin. The designation is required for Covaxin to be eligible to be part of the COVAX vaccine supply program. It is also seen as expediting the process of regulatory approval for use in countries like America.
The WHO announced that EUL approval for Covaxin on November 3.
The Big Drop
Why did OCGN stock start to plummet in the wake of the WHO announcement? It appears that retail investors were spooked when the news didn’t cause shares to climb further, then began a selloff. News that Ocugen had filed for emergency use of Covaxin for U.S. children with the FDA failed to put the brakes on the slide.
The selloff continued when Ocugen reported its third quarter earnings on Nov. 9. The company reported a loss of 5 cents per share, which was worse than Wall Street estimates of a 4 cents per share loss.
Bottom Line on OCGN Stock
Given the events of the past several weeks, does OCGN stock make sense to add to your portfolio?
There is potential for further growth in the OCGN story. If it gets that FDA approval, Covaxin would be eligible for use with American kids aged 2-18. That’s a pretty large market at this point, with only one other vaccine currently approved for that use. Outside of Covaxin — which tends to get all the attention — don’t forget Ocugen’s primary focus. It’s making progress in its gene therapy treatments for eye diseases.
The Wall Street Journal is tracking three analysts with Ocugen coverage. Three is a small sample size, but for what it’s worth, they have a consensus “overweight” rating for OCGN stock. Their median $10.33 price target offers a 34% upside.
If you’re willing to ride out the occasional volatility that comes with being a meme stock, OCGN may well be worth considering. Especially now that it’s come back down to Earth after its latest spike.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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