I like to give credit where it’s due unlike some characters in this business. And that credit belongs to InvestorPlace contributor Lou Carlozo. While everyone else was bearish on Ocugen (NASDAQ:OCGN) – including yours truly – Carlozo saw the potential bullish argument that very few people did. You only have to look at where OCGN stock is now compared to the time when he was writing about to recognize how right he was.
On a fundamental basis, of course, I understood why so many people had questions about Ocugen. A specialist in rare-eye diseases that lead to blindness, the company is on the cutting edge of biotechnology innovations. However, I think any intellectually honest observer of OCGN stock would look at the underlying financials and be utterly terrified.
Not Carlozo apparently. I must say that – with all due respect to the brilliant writer – that his thesis for OCGN stock initially seemed to me alarmingly simplistic. Yet he’s up more than 26X (I mean, holy smokes!) while I’m not. Here’s what he had to say:
…speculation isn’t such a horrible thing so long as you understand the risks and manage your expectations. That cycle of FDA funding points the way to rosier prospects, so maybe a token purchase isn’t a horrible idea. If you were going to spend $100 on some gadget for your iPhone, you could just as easily buy 300 shares of OCGN, tuck the stock cert in a drawer and call it good. Chance are you won’t miss the money once it’s spent. You may even forget.
And maybe, just maybe, you’ll be cleaning out that drawer years later, find the OCGN certificate you forgot about and discover you’re thousands of dollars richer. Awesome!
Don’t you just love fairy tale endings?
Take a bow, my friend. Somebody somewhere owes you an exquisite steak dinner. But should you take a shot on OCGN stock now? I must say, it’s very complicated.
OCGN Stock Is Biotech’s Equivalent of Workhorse
When I look at the meteoric rise of OCGN stock combined with the fact that many social media outlets believe shares can jump even higher, I can’t help but think about Workhorse (NASDAQ:WKHS). As you know, the hype train assumed that Workhorse had the U.S. Postal Service contract to replace its aging mail-carrier fleet in the bag.
Workhorse is the only competitor remaining that offers an all-electric solution! Of course, it’s going to win the USPS contract, especially with President Biden in power!
As I wrote in January, though, the all-electric platform itself posed challenges. And 24 hours before the big announcement, I warned that there’s a reason why the other non-all-electric competitors were still in the running. A day later, the USPS dropped a bombshell and picked Oshkosh (NYSE:OSK).
The point here is that you might think that Ocugen is a shoo-in for U.S. emergency use authorization for its novel coronavirus vaccine via a deal with India’s Bharat Biotech. The vaccine, called Covaxin, received emergency approval in India. And as our own Ian Cooper stated, if it receives approval here, OCGN stock can really soar.
When you look at how companies like Novavax (NASDAQ:NVAX) – a similarly embattled biotech firm – turned itself around as a major force, you can appreciate why investors are willing to gamble on OCGN stock.
Clearly, I was wrong about this so I’d prefer to defer to Carlozo, who got it right. Since that option isn’t available to me, though, I’ll say this much: you’ve got to be careful about playing into groupthink.
Yes, the fundamental argument is compelling. Covaxin has demonstrated encouraging Phase 3 results, particularly against multiple protein antigens. Of course, the one thing that can derail our pandemic recovery is the spreading of a deadlier strain of Covid-19.
But then again, sometimes the government does things you don’t consider logical. Workhorse was a perfect example of the dangers of assuming that you and the feds are on the same wavelength.
Still a (Strong) Glimmer of Hope
That said, you don’t want to dismiss the potential of OCGN stock. And why not, you might ask? Simply, the Biden administration is at a critical crossroads.
Yes, new daily coronavirus infections are down. However, many health experts have warned that the new Covid-19 strains are deadlier than the original virus. Further, it will take some time before the vaccination rollout reaches the point of engendering herd immunity.
It’s possible, then, that these new strains could again send the country into a cataclysmic crisis. President Biden – or at least his advisors – knows that this is an unacceptable outcome. In other words, it’s time to throw the kitchen sink at this monstrosity.
And that just might make – I can’t believe I’m saying this – OCGN stock a buy. Please, if you decide to gamble on this, only wager money you can afford to lose.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
