There's an old saying on Wall Street — almost certainly accurate, as yesterday's news shows — that when Wall Street analysts say "buy," they mean buy; when they say "hold," they mean sell; and when they say "sell," they mean "it's already too late — you should have sold yesterday."

Well, Chardan analyst Keay Nakae only reiterated its Neutral, or Hold rating on Ocugen (OCGN) — and not only does that probably actually mean "sell," but it also probably would have been best if investors had sold the stock — before Ocugen suffered a 28% drop in price yesterday.

On Thursday morning, you see, Ocugen revealed that its Covaxin coronavirus vaccine candidate, which was developed by Indian biotechnology company Bharat Biotech and which performed well in phase 3 clinical trials earlier this year, is being withdrawn from consideration for Emergency Use Authorization (EUA) by the U.S. Food and Drug Administration, and will have to take the lengthier route of undergoing a Biologics License Application (BLA) instead.

This wasn't Ocugen's idea, by the way, but an action recommended by the FDA. It does, however, make sense given that (1) coronavirus cases in the U.S. are currently in decline; (2) alternative coronavirus vaccines from Pfizer and Moderna seem to be performing very well; and (3) demand for vaccines in general appears to have been largely satiated in the United States, reducing the condition of "emergency" that is a sine qua non in Emergency Use Authorizations.

And here's the really bad news: Ocugen "anticipates that data from an additional clinical trial will be required to support the submission," and warns that "this will extend our timelines." Although the company reiterated its intention to bring Covaxin to market, it appears it has missed the boat. As a result, the company — which did less than $50,000 in revenue over the past year — probably cannot count on any new revenue coming from Covaxin, or not anytime soon at least.

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It was this news that prompted Nakae to — not downgrade Ocugen stock exactly, but slash his price target on the stock nearly by half, from $8 a share to $4.50 per share. The new figure implies a 31% downside from current levels. (To watch Nakae's track record, click here)

"We estimate that a BLA submission will occur in early 2022, with potential FDA approval around the end of 2022," explained Nakae (leaving out the potential for FDA rejection, probably because the news is already grim enough as-is). And this really is a crying shame for investors in the company, because clinical studies leading up to the now-pulled EUA application had shown the vaccine to be 100% effective at preventing severe cases of COVID-19, and 78% effective at preventing even mild or moderate cases.

Despite results that are arguably on par with or even superior to results from the now ancient Pfizer and Moderna trials, Ocugen's vaccine may now never see the light of day. There is, after all, a non-zero chance that, by the time Covaxin gets approved, the coronavirus pandemic will have passed and there will be no need for it at all.

Overall, OCGN has 4 recent analyst ratings, including 3 Holds and 1 Buy. Share are selling for $6.50, and the $7.88 average price target suggests a 22% upside. (See OCGN stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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