The Mesoblast (ASX:MSB) share price has rocketed 18% this week

It’s been a big week for the regenerative medicine company. We take a look at its recent news

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The Mesoblast Limited (ASX: MSB) share price has enjoyed a bumper week, rising an incredible 18%.

Today alone, the allogeneic cellular medicines company’s shares finished up 6.4% at $2.16.

With no news out of Mesoblast since earlier this month, we take a look into some recent announcements.

How has Mesoblast been performing?

Investors have been snapping up Mesoblast shares since they hit a 52-week low of $1.70 last week.

The price drop came after the company released its third quarter update, in which it revealed a fall in revenue to US$1.9 million. This was down 84% on the prior corresponding period, although that was mainly due to significant one-off milestone revenue a year earlier.

One area in its quarterly scorecard that may concern investors came from its increasing expenses, particularly management and administration costs. Staff expenses came in at $8.1 million compared with $5.7 million during the same period last year.

Mesoblast reported a loss after tax of US$26.5 million for the quarter, compared with a loss of $15.3 million during Q3 FY20.

To absorb growing costs and significant losses, the company successfully completed a private placement, raising US$110 million. Management noted the proceeds will be used to provide financial strength for operational and regulatory initiatives across multiple products.

Despite the poor result, a possible catalyst for the strong gains made by Mesoblast shares in the last 5 trading days is a recent bullish broker note.

Australian investment firm Bell Potter issued a price target of $4.70 for Mesoblast following its Q3 FY21 report. While it may have cut its outlook by 7.8% from its original note, this represents an upside of an astonishing 118% on today’s share price.

Mesoblast share price summary

In the past 12 months, Mesoblast shares have disappointed investors. The company’s share price is down by more than 40% since this time last year, and by 4% year-to-date.

It’s worth noting that, despite this week’s strong gain, Mesoblast shares are some way off their 52-week high of $5.70.

On valuation grounds, Mesoblast has a market capitalisation of around $1.4 billion, with approximately 648 million shares outstanding.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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