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?

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Mesoblast Ltd (ASX: MSB) shares have been among the best performers on the Australian share market this year.

Since the start of the year, the allogeneic cellular medicines developer's shares have risen an astonishing 230%.

This has been driven by optimism that its stem cell therapies may finally be granted approval by the US Food and Drug Administration (FDA) following years of knock backs, cash burn, and capital raisings.

Interestingly, despite more than tripling in value in 2024, one of the company's insiders continues to snap up Mesoblast's shares. This appears to be an indication that this board member believes its shares are still good value even after this rise.

Insider buys Mesoblast shares again

According to change of director's interests notices, Mesoblast's chief medical officer, Dr Eric Rose, has made two large purchases of shares in the last two weeks.

The first was made on 30 April and saw Dr Rose spend US$142,318.35 on the company's NASDAQ listed shares. He picked up 21,428 American Depositary Shares (ADS) for an average of US$6.6417 per share.

The chief medical officer then followed that up with a US$151,207.83 purchase on 8 May. This saw Dr Rose snap up 19,734 ADS for an average of US$7.6623 per share.

Should you buy shares?

One leading broker that would approve of these purchases is Bell Potter.

Last month, its analysts retained their speculative buy rating on Mesoblast's shares with a vastly improved price target of $1.40 (from 58 cents). This implies potential upside of approximately 36% for investors from current levels.

The broker is feeling positive about the company's Remestemcel product and believes that approval could be around the corner for the treatment of children with steroid refractory acute graft versus host disease (SR a GvHD). Bell Potter explains:

Our best estimate for approval of Remestemcel is mid August 2024. The planned adult study in GvHD has for the moment been postponed pending the outcome of the resubmitted BLA. Valuation is increased from $0.58 to $1.40 eflecting significant changes to revenue forecasts bought about by renewed confidence for a prospective approval for Remestemcel in Paediatric GvHD later this year. A first approval may represent a gateway to a series of label expansions in the ensuing period as reflected in the share price movement in recent days.

Though, it is worth remembering that its speculative buy rating means that Mesoblast shares may only be suitable for investors with a high tolerance for risk.

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.

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