The Mesoblast Limited (ASX: MSB) share price slumped 5.45% lower yesterday, but is the ASX biotech share a bargain buy?
Why the Mesoblast share price is under pressure
Mesoblast led the S&P/ASX 200 Index (ASX: XJO) losers on Monday as the Aussie biotech slumped to $4.68 per share.
That came as the company reported a sale from a key investor, M&G Investment Funds. M&G and its subsidiaries sold 5.1 million shares and reduced their voting power from 8.94% to 8.07%.
Investors were spooked by the sale and fears of potential profit-taking while the Mesoblast share price is elevated.
It’s been a string of good news for the Aussie biotech in recent weeks. The company posted a solid full-year result and received a key recommendation from the US Oncologic Drugs Advisory Committee.
The company rounded out last week with some more good news related to coronavirus treatments. The group received ethics approval for Phase 3 COVID-19 trials using its remestemcel-L treatment.
The Mesoblast share price actually edged lower despite the independent Data Safety Monitoring Board (DSMB) recommending the continuation of phase 3 COVID-19 trials after the first interim analysis.
Is Mesoblast cheap enough to buy?
The Mesoblast share price is now down 11.2% in the last 5 days, which has caught my eye.
I fully expect the ASX biotech share to continue showing a lot of volatility. That’s just the nature of global share markets at the moment with investors unsure how to value future growth in the current environment.
However, I think those willing to take some risks could bank some upside with Mesoblast. A strong pipeline and promising phase 3 trials provide enough comfort that the Aussie company is still on the right track.
I still think it’s a speculative buy given that much of its $2.7 billion market capitalisation reflects future earnings. However, ASX dividend shares are also under pressure and I think the Mesoblast narrative is good for the long-term.
With a significant addressable market and some continuing volatility, I think Mesoblast could be worth a look.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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