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BTIG More Positive on Vericel (VCEL) Product Portfolio Following Analyst and Investor Event

BTIG's Ryan Zimmerman shares his key takeaways from VCEL's Analyst Day- with a confident verdict.


BTIG analyst Ryan Zimmerman has walked away from Vericel Corp’s (NASDAQ:VCEL) analyst and investor event that much more impressed with the biotech firm’s product portfolio. As far as Zimmerman is concerned, the two key upbeat points in focus for VCEL: high level strategy coupled with physician to patient user feedback of the company’s products.

The company’s cell therapy asset MACI (autologous cultured chondrocytes on porcine collagen membrane) is looking enticing, considering Zimmerman forecasts revenue gains ahead. Additionally, VCEL’s sole permanent skin replacement asset in the severe burn care market Epicel also boasts bullish potential with more burn centers turning to Vericel’s treatment.

In reaction, the analyst reiterates a Buy rating on VCEL stock with a $13 price target, which implies a close to 4% upside from current levels. (To watch Zimmerman’s track record, click here)

“Mgmt. highlighted the opportunity and users spoke to the technical merits of the products. Consistent with our previous analysis, it is our view that MACI revenue should continue to grow through a variety of initiatives VCEL is actively engaged in and Epicel, while variable quarter to quarter, should continue to increase in the HSD on an annual basis as more burn centers utilize the product,” explains Zimmerman.

Additionally, the analyst highlights, “Mgmt. noted recent internal market research indicating positive perception from MD users as well as payer coverage from the top 30 payers nationally which should support continued growth. Separately, mgmt. views the recent published 5 year data […] a compelling door opener for new surgeons, especially this early in the MACI launch. Lastly, investors should expect further initiatives such as patient awareness campaigns through targeted online ads, a celeb spokesperson, and ongoing patient support to help drive an increase in biopsies and subsequent conversions.”

By 2020, Vericel management team’s longer-term goals set expectations above $100 million for revenue and over 60% for gross margins (GMs). In turn, the analyst looks for $105.6 million in revenue from the company two years from now as well as 67.7% in GMS against even more bullish consensus expectations betting on $109.6 million in revenue and 64.6% in GMS.

Notably, the company issued new longer-term goals at the event, which Zimmerman commends as “achievable” considering a one-two revenue trajectory punch between cell therapy assets MACI and Epicel. These targets are in fact “soft” and pose upside potential, Zimmerman contends- should VCEL bring a tuck-in candidate to the table, boost conversion rates, or see indication expansion for usage.

TipRanks indicates this biotech player has initial strong bullish word circulating around shares. All 4 analysts polled in the last 3 months rate a Buy on VCEL. With an encouraging return potential of 14%, the stock’s consensus target stands at $14.25.