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Vericel shares rocket after whizzing past the Street's 3Q estimates thanks to MACI sales

Last updated: 13:47 06 Nov 2018 EST, First published: 13:26 06 Nov 2018 EST

knees
BTIG analyst Ryan Zimmerman lifted his price target on Vericel to $20 from $17

Shares of Vericel (NASDAQ:VCEL) popped Tuesday after the specialist in advanced cell therapies for sports medicine and severe burn care trounced Wall Street’s third-quarter revenue and profit estimates.

In its latest quarter, the Cambridge, Massachusetts-based company saw its net loss shrink to $1.1 million, or a loss of $0.02 per share, from a loss of $5.4 million or $0.16 per share in the year-ago quarter. Its revenue, meanwhile, rose 58% from last year to $22.5 million compared with $14.3 million in the year-ago period.

Happy about the performance, investors sent Vericel shares up 45% to $16.77 in Tuesday’s afternoon trading session.

READ: Vericel Corp. soars 50% higher after US FDA approves its knee cartilage defect treatment

In a statement, CEO Nick Colangelo said the driving force behind the revenue growth was the take-up in MACI (autologous cultured chondrocytes on porcine collagen membrane) which is used for the repair of cartilage defects in knees.

“Based on the strength of our performance year to data and the continued momentum in MACI uptake, we have raised our full year 2018 revenue guidance and plan to further expand the MACI sales force to meet an expanded addressable market,” Colangelo said.

The results surpassed the expectations of Wall Street analysts who had predicted Vericel would see a loss of $0.11 per share on revenue of $18.14 million.

Cheery outlook

Looking ahead, Vericel has lifted its guidance for full-year revenue to a range of $87 million to $90 million, up from its prior forecast of $80m to $83m.

Vericel’s second FDA-approved product is Epicel, a graft made from a patients own skin. Such grafts offer a permanent type of skin replacement for patients with severe burns.

Total net revenue for the quarter of $22.5 million, included $16.4 million from sales of MACI and $6 million for Epicel sales.

BTIG analyst weighs in

In response to the “strong” quarterly report, BTIG analyst Ryan Zimmerman lifted his price target on Vericel to $20 from $17 and foresees growth for both MACI and Epicel, according to a note first seen by TheFly.com, the business news site.

A lack of competition next year and the company’s growing sales force make it “hard to imagine” that the stock will not see multiple expansion, according to Zimmerman.

Zimmerman is sticking to a Buy rating on Vericel shares.

As of the end of September, the company was sitting on cash of $97.8 million in cash and short-term investments, up from $26.9 million at the close of December.

Contact Ellen Kelleher at ellen@proactiveinvestors.com

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