On Tuesday, Jefferies adjusted its price target for Cibus (NASDAQ:CBUS), a biotechnology company specializing in gene editing for agriculture, reducing it to $5.00 from the previous $8.00. Despite this change, the firm maintained its Hold rating on the stock.
The firm's decision comes as Cibus is noted for carefully managing its balance sheet, focusing on maintaining the quality of its royalty economics. The company is positioned to potentially enhance its negotiating stance if the European Union approves gene editing in the first quarter of the next year.
Cibus's path to reaching free cash flow (FCF) breakeven is contingent upon the successful development of either a soy or wheat trait, or the ability to get its product across 2 to 5 million acres. This could result in higher royalties, particularly from U.S. rice.
Looking ahead, the years 2025 to 2026 are expected to be significant for Cibus, as they are anticipated to validate the company's single-cell cloning platform. This technology is crucial for both trait discovery platforms and improving the efficiency of field trial value propositions. The strategic focus on these areas underlines Cibus's commitment to advancing its gene editing technology within the agricultural sector.
In other recent news, Cibus, a leader in the agricultural gene editing sector, highlighted its transition from research and development to commercial operations during its third quarter 2024 earnings conference call. Despite a net loss of $201.5 million, largely due to an impairment of goodwill, the company remains positive about its future, citing the successful development of its Trait Machine process and partnerships with major seed companies.
Cibus anticipates earning $200 million annually in royalties from rice traits in the U.S. and a further $150 million from expansion into Asian markets. The company is also planning to launch herbicide-resistant and Pod Shatter Reduction traits, targeting significant market opportunities in the U.S., Latin America, and Asia.
The company's executives expressed confidence in the Trait Machine's efficiency and the protoplast regeneration method. They also discussed the potential for a cost-sharing model with partners by 2026. Regulatory progress in Europe and Asia is favorable for gene editing, which bodes well for future product launches.
In partnership with Albaugh, Cibus aims to aid in herbicide labeling in Latin America. The company is also exploring sustainable ingredients and fragrances, with announcements expected by next year. These are among the recent developments that reflect Cibus's ongoing efforts to enhance agricultural productivity and sustainability through gene editing.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Cibus's financial situation and market performance, providing context to Jefferies' price target adjustment. Despite the company's strategic focus on balance sheet management and potential future opportunities, InvestingPro data reveals that Cibus is currently not profitable over the last twelve months and is quickly burning through cash. This aligns with the firm's observation about the company's path to free cash flow breakeven being dependent on successful trait development or significant acreage coverage.
The company's revenue growth is a bright spot, with InvestingPro data showing a remarkable 449.34% increase in the last twelve months as of Q3 2024. This substantial growth may be indicative of the potential that Jefferies sees in Cibus's gene editing technology and its applications in agriculture.
InvestingPro Tips highlight that analysts anticipate sales growth in the current year, which could be crucial for Cibus as it works towards profitability. However, the stock price has taken a significant hit over the last six months, with a -70.08% total return, reflecting the market's current skepticism that Jefferies' reduced price target seems to echo.
For investors interested in a deeper analysis, InvestingPro offers 5 additional tips for Cibus, providing a more comprehensive view of the company's financial health and market position.
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