JPMorgan has downgraded Absci Corporation (NASDAQ:ABSI), which operates a medication innovation platform, to Underweight from Overweight, citing problems with the company’s product mix. This comes even though the company’s share price rose by more than 14% on Thursday.
Analyst Julia Qin notes, concerning the financials for Q2 2022 released by Absci (NASDAQ:ABSI), that the company has already surpassed its target for the fiscal year regarding drug discovery programs. Additionally, the company has decreased its capital expenditure and hiring to extend the cash runway by another year to 2025.
Qin is pleased with both the company’s better-than-expected agreement signing and the steps to conserve cash that has been taken. However, the analyst is concerned that Absci’s (NASDAQ:ABSI) Discovery Projects are becoming an increasingly dominant component of the company’s product mix. This concern stems from management’s observation that there are no independent Cell Line Development Projects in the pipeline.
The price target on the stock was withdrawn by the analyst because, despite the downstream economics of the Discovery Projects, they are associated with a lower probability of success and a longer time for revenue recognition. This results in “reduced revenue outlook and visibility over the medium term.”
Wall Street analysts continue to have a bullish outlook on Absci’s (NASDAQ:ABSI) shares, giving it an average recommendation of Buy.
Q2 Highlights
However, the business said that after undergoing a strategic restructuring, it had increased its cash runway until the end of 2025.
The drug and target development business has also inked 10 projects this year, which is more than the annual program objective. Absci (NASDAQ:ABSI) presently has 19 active programs.
Absci Reports Loss
Absci (NASDAQ:ABSI) reported a $-0.32 loss in Q2 GAAP. The company’s EPS falls short by $0.01.
The forecasted revenue of $1 million, which represents an increase of 42.9% year over year, falls short by $0.68 million.
The company had $206.0 million in liquid assets as of June 30, 2022, down from $252.6 million at the end of the previous year. The business stated, “they executed strategic restructuring to prolong financial runway through late 2025”.
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Author Shariq Khan 
