Is this a good time to get into Ocugen’s stock?

• Ocugen, Inc. (Nasdaq: OCGN) share price falls to US$10.23 a share
• The clinical-stage biopharmaceutical company is working on a potential vaccine
• Investors’ excitement waned slightly, pending developments in Covaxin
• Its stock has skyrocketed in the past two months
• Trade Ocugen, long or short, with an IG account today

Ocugen share price up over 3,000% since December

Biotech stock Ocugen lost ground on Wednesday (17 February 2021), tumbling 6.7% to close at US$10.23 on 16.2 million shares. That erased its previous day’s gains of 6.6%.

The share price has rallied 3,426% since closing at US$0.29 on 21 December 2020, the day before Ocugen announced it signed a binding letter of intent with India’s Bharat Biotech to co-develop Covid-19 vaccine candidate Covaxin.

Ocugen then said on 02 February 2021 that it inked a definitive agreement with Bharat Biotech to co-develop, supply and commercialise Covaxin. If granted emergency use authorisation (EUA) in the US, Ocugen will receive 45% of profits generated by selling the product there.

Institutional boost

Another factor that drove OCGN shares higher was a direct stock offering at a 27% premium.

Ocugen’s share price more than tripled amid heavy volumes last Monday (8 February), after it announced it had agreed to sell three million shares of common stock at US$7.65 apiece to healthcare-focused institutional investors. The offering raised some US$23 million in gross proceeds.

Subsequently, the pace of its share price surge lost some momentum when an investment banking firm flagged the downside risks in the Covaxin news.

Is Ocugen overvalued?

Last week, Chardan Capital Markets analyst Keay Nakae downgraded Ocugen to ‘neutral’, as he found its shares overpriced. But he increased the target price to US$13, from US$0.70, citing the recent stock price surge.

Given the drugmaker’s paltry revenues - which have yet to surpass US$50,000 - its market capitalisation as of 09 February was an astronomical 40,000 times of its trailing sales. Nakae pointed out that Ocugen shares had climbed more than 54-fold since its Covaxin announcement last December.

Nakae added that Ocugen still needs to obtain EUA in the US, and ‘what this will require is uncertain at this point, including the possibility of an additional US-based study’.

The company will also have to establish Covaxin manufacturing operations in the US, and may need to ‘raise debt or equity funds in the future’, according to Nakae, who expects zero revenues for Ocugen this year.

Meanwhile, Cantor Fitzgerald analyst Kristen Kluska maintained an ‘overweight’ rating last week with an unchanged price target of US$4, taking into account the share price volatility of late.

Three in four analysts have a ‘buy’ call on OCGN shares while one recommended ‘hold’, with an average 12-month target price of US$7.38, according to Bloomberg data. That implies a 28% downside based on Wednesday’s closing price.

Before the Covid-19 pandemic, the unprofitable, clinical-stage biopharmaceutical company focused on commercialising innovative therapies for rare and underserved eye diseases.

How to trade Ocugen shares with IG

Are you feeling bullish or bearish on Ocugen's stocks?

Either way you can buy (long) or sell (short) the asset using derivatives like CFDs and spread betting offered on IG's industry-leading trading platform, or by investing in the share directly, in a few easy steps:

1. Create a live or demo IG Trading Account, or log in to your existing account
2. Enter <Ocugen, Inc.> in the search bar and select the instrument
3. Choose your position size
4. Click on ‘buy’ or ‘sell’ in the deal ticket
5. Confirm the trade