Inovio Pharmaceuticals (INO) recently reported earnings for its second quarter of Fiscal Year 2022. Earnings per share came in at -$0.46 – a significant miss. Analysts had expected Inovio to report EPS of -$0.31. In the past nine quarters, it has missed estimates six times. The company is not profitable, and it has taken steps to reduce costs. Unfortunately, this is a temporary solution that extends its cash runway by only two years.
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Sales increased 187.5% year-over-year, with revenue hitting $784,395 compared to $272,824. The revenue increase was primarily driven by the delivery of its smart devices to the U.S. Department of Defense
However, operating expenses grew by 25.6%, which means that the company did not demonstrate any operating leverage. Indeed, operating expenses exceeded $104 million. With such a heavy cash burn, Inovio’s balance sheet needs to be solid. As of June 30, cash, cash equivalents, and short-term investments amounted to almost $350 million.
The company believes that this amount can last until the third quarter of 2024, as it guided for a cash burn of $73 million in Q3 2022 with expectations that it will decrease from there on. As a result, investors are likely to see dilution from equity raises at some point in the future.
Investor Sentiment for INO is Negative
The sentiment among TipRanks investors is currently negative. Out of the 551,954 portfolios tracked by TipRanks, only 0.3% hold INO. However, the average portfolio weighting allocated towards INO among those who do have a position is 3.22%. This suggests that investors of the company are fairly confident about its future.
However, in the last 30 days, 1.6% of those holding the stock decreased their positions. As a result, the stock’s sentiment is below the sector average, as demonstrated in the following image:
What is the Target Price for INO Stock?
INO has a Hold consensus rating based on one Buy and five Holds assigned in the past three months. The average INO price target of $2.67 implies 27.1% upside potential.
Final Thoughts – Inovio Stock is a Very Speculative Bet
Although the company saw revenue almost triple, its sales figures still pale in comparison to its cash burn. Sure, the share price could suddenly return to over $30 per share, but the company itself currently doesn’t create any shareholder value. As a result, Inovio is a very speculative bet, especially since economic growth is expected to slow down going forward.
