Mesoblast Ltd (ASX: MSB) shares have had a choppy run over the past year.
Despite some strong operational progress, the biotechnology company's shares finished Thursday's session at $2.58, well below their recent highs.
So, has the market become too cautious on the Mesoblast story, or is there more going on beneath the surface?
Let's take a look at what Bell Potter is saying following the company's latest update.
What is the broker saying?
Bell Potter believes Mesoblast continues to make meaningful progress, particularly as it moves deeper into the commercial phase with its lead product, Ryoncil.
Commenting on its second quarter update, the broker highlighted the strength of revenues relative to expectations and the early signs of commercial momentum. It said:
Ryoncil gross revenues for the December quarter had previously been reported at $35m (+60% vs 1Q26). Net revenues were $30m reflecting an increase in the gross to net discount to 14.3% vs 12.8% in 1Q26. The increase in GTN discount is a reflection of the sales mix between medicare and private patients. Our model continues to assume a 13% GTN discount long term. Consensus for Dec qtr revenues was $27.6m, hence the result was an 8% beat.
Bell Potter also pointed to encouraging real-world data emerging since Ryoncil's launch, which it believes adds further confidence to the long-term commercial outlook. It adds:
Of the first 25 patients treated with Ryoncil in the 'real-world' clinical setting post launch, 21 (84%) were alive at day 28. The data is highly consistent with data from the clinical trial setting. […] The outcomes highlight the need for clinicians to avoid delays in making Ryoncil available to patients, i.e. it should be made available as early as possible where patients fail to respond to steroid treatment.
The broker believes this real-world performance should help drive broader adoption, particularly given that reimbursement coverage is now close to universal.
Debt reset
Bell Potter also sees the company's new debt facility as a key positive, both from a balance sheet and earnings transparency perspective. The broker explains:
The new loan package vastly simplifies the balance sheet and earnings transparency by virtue of the simple 8% charge, paid quarterly – interest only for five years. […] This new facility will considerably lower the cost of finance which we estimate has an all in cost of ~18%. The full year annualised saving on interest charges alone is estimated at ~$14m of which the part year impact on FY26 is estimated at $6m–$7m.
Importantly, Bell Potter believes improving sales trends and stabilising operating costs should see Mesoblast move closer to cash flow breakeven very soon. It adds:
Based on the trends for sales and operating expenses, we continue to believe MSB should be generating material positive cash from operations from the June quarter of CY2026, minimising the need for additional debt.
Should you buy Mesoblast shares?
In response to the update, Bell Potter has retained its speculative buy rating on Mesoblast shares with an improved price target of $4.45 (from $4.00).
Based on the current Mesoblast share price of $2.58, this implies potential upside of over 70% for investors over the next 12 months.
