Up 377% since March: Is the Mesoblast share price a buy?

The Mesoblast Limited (ASX: MSB) share price has surged higher in 2020 so what can we expect from the August full-year result?

The Mesoblast Limited (ASX: MSB) share price has been a big success story in 2020. The Mesoblast share price has now rocketed 377.5% higher since bottoming at $1.02 per share in the March bear market.

increasing bar graph created from medical tablets

Image source: Getty Images

What does Mesoblast do?

Mesoblast is a leading Aussie biotech company that specialises in regenerative medicine. 

The company has a number of innovative cellular medicines to treat serious and life-threatening diseases.

Specifically, Mesoblast seeks to provide treatments for inflammatory ailments, cardiovascular disease and back pain.

It also has a number of potential product candidates in Phase 3 trials including treatment for acute respiratory distress syndrome due to COVID-19 infection.

The Mesoblast share price has been a top performer for a number of years and is up 137.6% since 1 January.

Why is the Mesoblast share price surging higher?

It was a good start to the week for shareholders as the company's shares surged 10.7% higher on Monday.

That was despite no major announcements from the ASX biotech company.

I think investors are anticipating some good news in the coming days or weeks. It's not uncommon to see a company's share price surge ahead of a big announcement such as a successful trial result or product announcement.

There's no firm date for Mesoblast's full-year result but it did report its FY19 result on 30 August 2019.

I think the Mesoblast share price is certainly one to watch. There is obviously strong momentum behind the stock but investors are pricing in a lot of future growth.

That means the FY20 result looms as a real trigger point. If Mesoblast's earnings and research and development pipeline are promising, I'd expect the biotech share to climb higher.

However, if we see a soft result or further headwinds in FY21, investors may pull back from the current valuation.

Foolish takeaway

Whether you're a biotech investor or not, the Mesoblast share price rise has been impressive.

The August full-year result looms as a real make or break for the company's shares this year.

I'm quietly confident of an outperforming result from Mesoblast. I think the company has enough in the way of promising potential products that it is on track for further success in 2020 and beyond.

Either way, I'll be watching any announcements from the Aussie biotech company closely this month.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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