Ocugen: A Serious Uphill Battle to Gain Momentum

Ocugen (OCGN) is among the more intriguing stocks for investors watching the volatility of 2022 play out. This biotech stock, largely viewed as a COVID-19 vaccine play, has ebbed and flowed alongside market sentiment for many vaccine-related stocks.

However, as we’ve seen with other established pharma companies, the recent trajectory of this space hasn’t been bullish. Ocugen surged in Q1 last year to $18.77 at its peak, absolutely skyrocketing and becoming a favorite trading vehicle of retail investors.

Now, the stock is trading just over $3 per share, its lowest level since before its parabolic surge in early 2021.

Thus, it appears most, if not all, of the momentum Ocugen had seen to start 2021 has fizzled out. Can this potential COVID-19 vaccine player pick up steam again in Q1 of this year? Let’s dive into this a bit deeper.

Right now, I’m taking a neutral stance on OCGN stock for many of the reasons I’m going to dive into shortly.

Ocugen: A New Entrant into Vaccine Business

A diversified biotech company, Ocugen’s operations have mainly focused on gene therapy solutions for various eye diseases. However, via a partnership with Bharat Biotech out of India, Ocugen quickly became the latest potential COVID-19 vaccine approval that had the market talking.

Any sort of major catalyst like this is a big one for any stock. Accordingly, retail investors looking for quick wins piled into OCGN stock, hoping for an approval, and a subsequent surge, to make a tidy profit in a short amount of time. Indeed, considering OCGN stock traded around $0.30 to end 2020, and surged to more than $18 per share in Q1 2021, many folks did make a tremendous amount of money in a short amount of time.

Of course, being a new entrant in the global vaccine business is both good and bad. On the positive side, it’s unclear what Ocugen/Bharat’s potential market could be. Incumbents Moderna (MRNA) and Pfizer (PFE) almost entirely dominate the U.S. market. However, perhaps a lower-cost, or more-effective vaccine still has a shot at winning over the arms of booster patients.

Bears have noted that the strong market share held by incumbents, as well as a harsh unwillingness from regulators to approve other vaccines in the U.S., doesn’t bode well for Ocugen in the near term. Those hoping for an official U.S. approval in 2021 didn’t get it. Accordingly, perhaps the window of opportunity for Ocugen has now closed.

Right now, the outlook on Ocugen is more bearish than many expected at the outset of last year. Whether that changes remains to be seen. However, not much movement appears to be made on the U.S. approval front, something that has some investors concerned.

There Was a WHO Approval, Though

In early November, COVAXIN, the Ocugen/Bharat COVID-19 vaccine, was granted emergency use listing status by the World Health Organization (WHO). This move provided bulls with a strong investment thesis and a belief that a U.S. approval could be in the works.

Unfortunately, while Ocugen has worked on its application and is working with U.S. regulators on achieving approval, little progress has been made on this front. With Ocugen’s status as essentially the international arm of the partnership between this company and Bharat, it’s clear that a U.S. approval is what is needed to take this stock on another nice run. The absence of such an approval continues to weigh on this stock.

Additional concerns about the omicron variant being much less amenable to vaccines have hurt the investment thesis for all vaccine stocks across the board. Thus, it’s a hard time to be an investor in a company like Ocugen right now.

Wall Street’s Take

Turning to Wall Street, Ocugen is a Moderate Buy. Out of three analyst ratings, there are two Buys and one Hold recommendation. 

The average Ocugen price target of $10.33 implies 238.7% upside potential. Analyst price targets range from a high of $15 per share to a low of $6 per share. 

Bottom Line

WHO approval or not, Ocugen is a biotech stock with a heavy uphill climb to regain momentum. This is one of 2021’s momentum stocks that appears to be in a difficult position (to say the least) to regain investor enthusiasm. Presently, there are few catalysts most investors can point to that could take this stock higher, outside of surprise announcements this year.

Thus, OCGN stock appears to be one reserved for speculators and those on the higher-end of the risk spectrum. Sure, a short squeeze could materialize, or a surprise authorization announcement. However, in the absence of these catalysts, Ocugen lacks a strong fundamental argument for ownership right now.

Accordingly, staying on the sidelines with Ocugen appears to be the prudent move right now.

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