Discusses the latest hedge fund position with quant analysis and market commentary
On Wednesday evening after the closure of US equity markets, a 13G filing with the SEC revealed Steven Cohen’s hedge fund Point72 had disclosed a 5.3% stake in lunch disease focused biopharma company Plumonx (NASDAQ:LUNG).
The filing came only one day after BofA’s latest recommendation downgrade on Tuesday which pushed the stock down 11%.
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The trade comes after Pulmonx’s stock has shown solid recovery momentum with shares up more than 60% from all-time lows reached in early November following third quarter results.
Even with the last two months of momentum, the stock continues to trade 75% below its share price from the start of 2022. Pulmonx, along with the rest of the small/mid-cap biotech sector has re-rated lower over 2022 as discount rates pushed down valuations for the sector.
Point72’s Stake In Pulmonx
In the latest filing, Point72 disclosed the ownership of 1,971,810 shares which makes the fund the 6th largest institutional holder on the register. The purchase has contributed to the above average Fintel fund sentiment score of 69.24 which ranks the LUNG in the top 20% when screened against 36,181 other global securities.
Pulmonx has a total of 264 institutions on the register that collectively own 42.7 million LUNG shares. Some of the other largest shareholders on the register include: Primecap Management Co, Deerfield Management, Champlain Investment Partners, Morgan Stanley, TimesSquare Capital Management, and Jefferies Group LLC
On Tuesday morning, Bank of America’s equity research arm BofA downgraded the stock to an ‘underperform’ recommendation from ‘neutral’ as the stock had rallied above the firm’s $8 price target. The BofA analysts noted to clients that they had been cautious about how long it would take for Pulmonx’s management to develop market and growth expectations.
The firm highlighted that the valuation for the stock is consistent with small cap medtech peers growing at similar rates and decoded to waiting on the sidelines watching for signs of market acceleration again in a non-Covid environment. This institution and many other sell-side firms lowered forward forecasts for Pulmonx when the company provided updated guidance during the third quarter results.
The new FY22 guidance included a downgrade in product revenue guidance from $55 to $60 million to a new range of $51.5 to $52.5 million. At the same time, Pulmonx upgraded operating expense guidance from $98 to $100 million upwards to $100 to $105 million.
Fintel’s sell-side analysis page for LUNG also highlighted that Citigroup upgraded the stock from ‘neutral’ to ‘buy’ during December whilst decreasing its target price from $14 to $10.
Fintel’s consensus price target of $11.95 for LUNG suggests the stock could experience a further 44.83% capital upside from current levels.
This latest trade is only one of many during the quarter for the hedge fund. Point72 Asset Management currently has a total of 1,369 total holdings as per the latest SEC filings.
Some of the other new positions added during the quarter during November included a 7.1% stake in Marinus Pharmaceuticals Inc (NASDAQ:MRNS), a 9.99% stake in Abeona Therapeutics Inc (NASDAQ:ABEO), a 5.1% stake in Health Catalyst Inc (NASDAQ:HCAT) and a 4.9% stake in Gritstone Oncology (NASDAQ:GRTS).
Article by Ben Ward, Fintel