bluebird bio shares rally as Morgan Stanley believes lovo-cel likely to be approved by December PDUFA date

bluebird bio (BLUE) shares jumped Friday after Morgan Stanley analysts raised the stock to Equal-Weight from Underweight, lifting the price target to $7 from $3 per share.

BLUE shares are up more than 11% at the time of writing, trading at around $5.35.

The analysts said the firm believes lovo-cel is likely to be approved for sickle cell disease by the December 20 PDUFA date, and as a result, they have raised the stock’s rating.

“We believe that the stock is likely to continue to move up heading into the regulatory decision later this month. Longer term, we expect investor focus to return to the company’s launches for Skysona, Zynteglo, and lovo-cel, which we expect will continue to be gradual,” the analysts said.

“We raised our estimated lovo-cel drug price to $1.5M (from $1M). We lowered R&D expenses with the completion of the company’s studies, lowered COGS in the out years to incorporate management commentary that it can achieve a 70% gross margin, and raised SG&A expenses ahead of the expected lovo-cel launch in early 2024,” they explained.