Mesoblast Ltd (ASX: MSB) shares could be seriously undervalued.
That's the view of the team at Bell Potter, which remains very bullish on the biotechnology company's shares.
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What is Bell Potter saying?
Bell Potter was pleased to see that Mesoblast's Ryoncil product is building momentum. This saw Mesoblast report sales in line with the mid point of its guidance range. It said:
MSB has reported 4Q26 revenues of US$36m (+20% vs 3Q26) in line with our forecast. FY26 revenues for Ryoncil totalled US$115m which is the mid point of guidance (i.e. US$110m – $120m). The full year result represents an outstanding result considering the product was launched from a standing start in April 2025, prior to broad reimbursement availability.
Commercial adoption has been exceptionally strong and has continued to grow as barriers to adoption have fallen away – particularly for reimbursement. We expect Group revenues for FY26 of US$121m inclusive of Temcel royalties (Japan).
Looking ahead, the good news is the broker continues to believe that sales will grow strongly in FY 2027. It adds:
Our forecast for FY27 Ryoncil sales remains bullish at US$275m relative to the annualised exit rate of US$144m. The implied quarterly growth rate is ~27% compounding. We continue to believe this is achievable given the progress in recent months on two key fronts: a) expansion of the key account manager team servicing this market – 6 additional FTEs being hired to service large markets in the north eastern US and California; and b) MSB has only recently begun to gain traction with the very largest transplant centres in the US, both on the east and west coast.
The forecast also includes a small revenue stream from off label use amongst young adults, where some payers have reimbursed hospitals for off label use in isolated cases following patients failing on SOC for SR aGvHD. For these reasons, we retain our FY27 forecast.
Mesoblast shares tipped to double
According to the note, Bell Potter has effectively upgraded Mesoblast shares to a buy rating (from speculative buy) and held firm with its $4.45 price target. This is approximately double its current share price. It concludes:
MSB is expected to commence submission of the various modules of the Biological Licence Application for Rexlemestrocel-L in heart failure and commence recruitment of the adult study in GvHD (for Ryoncil). We expect MSB will also engage in preliminary discussions with distributors for Rexlemestrocel-L in the chronic lower back pain indication, ahead of the phase 3 readout in mid CY27.
Investment thesis: TP $4.45 (unchanged) There are no changes to earnings and we retain our $4.45 target price and Buy rating. As MSB is generating strong revenue growth the Speculative risk rating is no longer warranted.
