Broker says this ASX biotech stock could almost double in value

Bell Potter is feeling very bullish about this risky stock.

| More on:
medical asx share price represented by doctor giving thumbs up

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

If you're the type of investor who likes high-risk reward investments, then read on.

That's because a leading broker is tipping an ASX biotech stock to almost double in value over the next 12 months.

The company in question is Imugene Ltd (ASX: IMU).

It is a clinical-stage immuno-oncology company developing a range of new and novel immunotherapies that seek to activate the immune system of cancer patients to treat and eradicate tumours.

It claims to have unique platform technologies that seek to harness the body's immune system against tumours, potentially achieving a similar or greater effect than synthetically manufactured monoclonal antibody and other immunotherapies.

The key product in its pipeline is the off-the-shelf cell therapy CAR T drug azer-cel (azercabtagene zapreleucel), which targets CD19 to treat blood cancers.

What is the broker saying about this ASX biotech stock?

According to a note out of Bell Potter, its analysts were pleased with the company's strategic manufacturing and process development partnership announcement this month with Kincell Bio.

Not only does this bring cash in from the sale of its North Carolina manufacturing facility, but it also reduces its expenses materially. Management expects to realise US$32 million in staff cost reductions, manufacturing efficiencies, and overhead savings over the next three years because of the deal.

Bell Potter commented:

The deal allows Imugene to re-focus on its core competency of research and development for new oncology drugs, rather than the operation of complex production facilities. Kincell is a well established contract manufacturing business in biologics and is ideally suited to the manufacturing operations which Imugene inherited with the Azer-cel acquisition of September 2023.

In light of this and with the company's progress with three core asset programs, it feels that Imugene is reaching an inflection point. It adds:

The company remains well funded with cash at 31 December of $139m. The Development Partnership with Kincell will free up crucial management time and resources to concentrate on the clinical programs each of which are moving toward value inflexion points.

Big returns, but high risk

In response to the above, this morning the broker has reiterated its speculative buy rating and 15 cents price target on the ASX biotech stock.

Based on its current share price of 8.4 cents, this implies a potential upside of approximately 79% for investors over the next 12 months. To put that into context, a $5,000 investment would be worth almost $9,000 if Bell Potter's recommendation proves accurate.

But as I mentioned above, this is a high-risk investment. Bell Potter classes its speculative buy ratings as "investments [that] may carry an exceptionally high level of capital risk and volatility of returns."

Motley Fool contributor James Mickleboro 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 Scott Phillips.

More on Healthcare Shares

Research, collaboration and doctors working digital tablet, analysis and discussion of innovation cancer treatment. Healthcare, teamwork and planning by experts sharing idea and strategy for surgery.
Healthcare Shares

Buy, hold or sell these 3 ASX 200 healthcare shares: Experts

These experts reveal their calls on CSL, Resmed and Sonic Healthcare shares today.

Read more »

Doctor doing a telemedicine using laptop at a medical clinic
Share Gainers

Guess which ASX healthcare stock just exploded 63% on Federal budget funding news!

Investors are bidding up the ASX healthcare stock amid extra funding in the Federal budget.

Read more »

two doctors smile as they sit together at a desk looking at a patient's Xray.
Healthcare Shares

This ASX 200 healthcare stock just hit an all-time high: Is it too late to buy?

The valuation of this high-performer has soared.

Read more »

A smiling woman sits in a cafe reading a story on her phone about Rio Tinto and drinking a coffee with a laptop open in front of her.
Healthcare Shares

1 magnificent ASX stock down 10% to buy and hold forever

Analysts say this high-quality stock is a great option for investors right now.

Read more »

ventilator mask
Healthcare Shares

3 reasons ResMed shares 'are just too cheap!'

This stock could still produce healthy gains, according to one fund manager.

Read more »

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

2 ASX healthcare shares rocking higher on big news

This 'spray-on skin' company and cancer-fighting biotech have exciting news for shareholders today.

Read more »

Scientists working in the laboratory and examining results.
Healthcare Shares

Insider still buying Mesoblast shares despite 230% rise this year: Should you buy?

This high-flying share is still reporting insider buying. Should you buy too?

Read more »

A woman reclines in a comfortable chair while she donates blood holding a pumping toy in one hand and giving the thumbs up in the other as she is attached to a medical machine to collect her blood donation.
Healthcare Shares

Buy CSL shares for growing dividends and 'compelling long-term tailwinds'

CSL has increased both its interim and final dividend every year since 2021.

Read more »