Why This Analyst Sees a 51% Return on Cathie Wood's Favorite Biotech Stock

Biotech stocks have the potential for huge gains if a product or drug is found to be effective and safe, but investing in the stocks of these companies can be volatile.

Cathie Wood and her flagship fund ARK Innovation ETF ARKK favored Crispr Therapeutics AG CRSP in 2021, buying up millions of shares in the biotech company backed by Mark Zuckerberg, CEO of Meta Platforms Inc META, and Alphabet Inc GOOGLGOOG co-founder Sergey Brin.

Although Wood sold part of the position, Crispr remains the ninth heaviest stock in the ARKK portfolio, with approximately 5.7 million shares.

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Speculative investors and tech leaders aside, The Mercator analyst Gianni Di Poce sees 51% upside potential in the organic stock; here's why.

The Call: "I'm bullish on CRSP as long as the stock stays above $69-70," Di Poce said. "Target upside from $119 to $121."

The analyst wrote in his weekly Benzinga Pro Insider report that the company's revenue soared to $914.9 million in 2021 from just $719,000 in 2020." With this growth trajectory,” he wrote, “stock assessment is not based on traditional fundamental metrics, but rather on the belief that gene editing will be a big part of our future.”

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Despite fundamental headwinds, the chart shows tight consolidation just below the resistance of a rounded bottom pattern.

According to Emergen Research, the global gene editing market size was $5.2 billion in 2020 and is expected to reach $18.5 billion in 2028.

Samarth Kulkarni, CEO of Crispr, said during the company's earnings call on August 8 that the company remains in a strong position to bring transformative medicines to patients suffering from serious illnesses.

"CRSPR has key drugs in its development pipeline, including one to treat sickle cells," Di Poce said. "The stock is one FDA clearance away from a price spike."

Additional analyst views: Credit Suisse recently maintained its neutral rating on Crispr, while RBC Capital maintained sector performance.

Photo: iQoncept via Shutterstock

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