Volatility May Continue, But This Stock Remains a Buy

After pulling back earlier this month, investors are jumping back into CRISPR Therapeutics (NASDAQ:CRSP). Since Nov. 3, CRISPR stock has bounced back 26%, from $86.72 per share up to about $109 per share on Nov. 19. But, while shares are near their highs, don’t think for a second the party’s over.

Why? Firstly, gene editing is a medical field that is still in its early stages. And, as its potential applications become reality, this leader in the space is set to thrive. Secondly, as the company continues to release trial results and other positive developments, more of the uncertainty fades away, which will help send shares higher.

Thirdly, with the recent positive results from Covid-19 vaccine trials, investors may start paying less attention to “vaccine stocks.” And where will they direct their attention back to? Non-pandemic biotech plays like this company.

In short, there are plenty of reasons why shares are a strong opportunity, even as they remain near all-time highs.

CRISPR Stock, Recent Success and What’s Next

October brought good news and bad news for this development-stage biotech company. Results from its CAR-T (chimeric antigen receptor T cells) therapy trial showed some success for its gene-edited treatment.

Unfortunately, the death of one of the trial participants took some of the wind out of this good news.

If that wasn’t bad enough, a disappointing earnings release also had an impact on CRISPR shares.

Revenue and earnings fell short of expectations. With both factors having an impact, it’s no surprise shares fell from over $110 per share, back down below $90 per share.

But, while those easily scared off sold their positions, those in for the long-haul know that there’s going to be some volatility along the way. And those who seized the opportunity and bought the pullback? They’ve already seen some solid gains after buying on last month’s weakness.

Yet, while shares have climbed back above $100 per share, don’t think it’s too late to seize this opportunity. Things are just getting warmed up for CRISPR. With further progress ahead, buying now still allows you to get in on the ground floor.

3 Reasons Why There’s Further Runway Ahead

As mentioned above, there are three reasons why the ship hasn’t sailed yet with CRISPR. Sure, shares may be back near their all-time highs. But, there’s plenty in motion to send shares even higher in the coming years.

Firstly, there is tremendous potential runway with gene editing. When you hear the term “gene editing,” you may think of “designer babies,” or other kinds of ethically questionable activities. But as I said back in September, CRISPR isn’t involved in that part of gene editing. Instead, the company is applying this technology to find ways to fight cancer and other serious diseases.

CAR-T therapies to treat cancer are a main area of focus for CRISPR. But that’s not all. Take a look at its pipeline, and you’ll see it has candidates in motion to tackle a wide variety of medical diseases, including β-thalassemia and sickle cell disease. Simply put, the company is well-positioned to dominate in this emerging field.

Secondly, additional positive developments will attract further interest in the stock. Sure, right now the company’s market value ($7.72 billion) looks steep relative to its current sales. But, this valuation only partially prices in its long-term potential. As more uncertainty fades, the gap will continue to narrow.

Thirdly, with the recent Covid-19 vaccine success, investor attention will continue to move away from “vaccine stocks,” and back toward non-pandemic biotech plays. While this isn’t a major catalyst for CRISPR stock, it’s still a factor that could help move shares higher in the coming months.

Volatility Could Continue, But Seize the Opportunity

While shares have rebounded in recent weeks, there’s still a chance we see another pullback. Given this is a long-term play, volatility is something you’ll have to contend with. But even if the company encounters more hiccups like it did back in October, consider it prime time to buy when investors get skittish again.

Sure, with this company basically still in the pre-revenue stages, shares look richly priced. But, you need to consider its long-term potential. As seen from recent developments, there’s clear indication the company is well on its way of living up to said potential.

As shares trade just below all-time highs, what’s the play with CRISPR stock? Consider now, and any additional pullback, prime time to enter a position.

— Matt McCall and the InvestorPlace Research Staff

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Source: Investor Place