ABCL Stock: How This Pullback Could Offer A New Buying Opportunity

AbCellera Biologics

AbCellera Biologics

ABCL

$0.20


1.47%


37%

IBD Stock Analysis

• Stock briefly broke out of cup base on Nov. 14, then retreated
• Shares created a high handle for cup base, offering a new entry
• Relative Strength Rating is 97 out of 99; Composite Rating is 94

Composite Rating

Industry Group Ranking

Emerging Pattern

Cup with Handle

* Not real-time data. All data shown was captured at
1:35PM EST on
11/29/2022.

Antibody machine AbCellera Biologics (ABCL) is the IBD Stock Of The Day as ABCL stock eyes a potential entry following a brief pullback.

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The biotech company went public at a critical point in the Covid pandemic — roughly a month after it and Eli Lilly (LLY) gained emergency authorization for their first antibody. At the time, the medicine worked to block the virus that causes Covid, either as a treatment or prevention.

Since then, AbCellera has expanded its reach significantly. The company works in the early stages of antibody discovery and then hands drug candidates over to partners for further tests. Chief Executive Andrew Booth recently called 2021 a “breakout year” for that type of deal.

“We play in the antibody therapeutic space and discovery,” he said during the recent Stifel Healthcare Conference. “We are rebuilding the front end of antibody discovery to be best in the world from target identification to the clinic.”

ABCL Stock: Discovering Antibodies

Antibodies are proteins produced in the blood to counteract specific antigens. They can recognize a host of bacteria, viruses and foreign substances. Biotech companies can also engineer antibodies as treatments for specific diseases. AbCellera works to discover antibodies.

CEO Booth splits AbCellera’s business into three buckets.

The first bucket involves discovery work at the behest of a partner. In that case, AbCellera will take a royalty on future sales of the drug candidate. The second type of deal involves AbCellera taking a royalty position on a potential antibody-based drug and investing in its partner’s equity. In the third bucket, AbCellera initiates work on its own, focusing on difficult-to-target diseases.

In the recent September quarter, AbCellera reported $101.4 million in total revenue. Revenue soared by a quadruple-digit percentage and easily beat ABCL stock analysts’ call for $75 million. That top line included $93.3 million in royalty revenue.

AbCellera also posted an 8-cent per-share profit, topping expectations by two pennies, according to FactSet. Next year, however, analysts expect the company to report losses of 28 cents per share.

Tackling Tricky Drug Questions

Booth says AbCellera is working on tricky antibody problems. Roughly 40% of its partners are biotech companies, with the remainder being mid- or large-cap pharmaceutical companies. Early this month, Regeneron Pharmaceuticals (REGN) decided to advance an antibody discovered by AbCellera into further preclinical testing.

Typically, large biopharma companies are very capable of performing their own antibody work.

“They have come to us when they’re stuck, the they have reached the limits of the conventional antibody discovery technologies and yet there’s still a real interest in finding an antibody against a certain target,” Booth said. “Recently, we announced progress with Regeneron, who is a very highly enabled group.”

At the end of the September quarter, AbCellera had 38 discovery partners, an increase of 9% from the year-earlier period. The company also reported 164 programs under contract with 92 already started. All of that work led to seven compounds in human testing, up 40% year over year.

ABCL Stock Rises From May Bottom

After going public in December 2020, ABCL stock generally trended down through this May. Since then, shares have trended higher. AbCellera stock briefly broke out of a cup base with a buy point at 14.60 on Nov. 14, according to MarketSmith.com.

Now, shares are making a pullback to their 21-day line, creating a high handle for that cup base, and could offer investors a new entry. ABCL stock slipped 1.5% to close at 13.36 on the stock market today.

Importantly, ABCL stock is highly rated on two measures, according to IBD Digital. Shares have a strong Relative Strength Rating of 97, putting them in the leading 3% of all stocks in terms of 12-month performance.

AbCellera stock also has a Composite Rating of 94, a sign it tracks in the top 6% of all stocks when it comes to fundamental and technical measures.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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