Shares Zai Lab (NASDAQ:) didn’t perform well in the last 3 months, as it lost almost 38%, underperforming the overall market heavily.

The stock will rebound strongly and eventually recover most of its losses before 2021 ends. Therefore, I believe Zai Lab is a good investment. TipRanks has ZLAB stock chart.

Zai Lab, located in Shanghai, People’s Republic of China is a biopharmaceutical business that develops and commercializes medicines for patients with medical conditions. They continue to create new treatments.

Zai Lab has been developing and marketing products to treat autoimmune, infectious, and cancer-related diseases.

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Q2 2021

The demand for ZEJULA and Optune, both treatments for breast cancer and other non-small-cell lung diseases, increased significantly in the second quarter. These two products were so popular that revenue rose by 340% over the year, to around $37 million. This was more than analysts expected by $9.5million.

The bottom line was hit hard by the fact that the increased turnover did not generate net profits. Research and development costs also rose. Zai Lab needed to form partnerships with other companies to increase the product pipeline from a strategic perspective.

Zai reported a net loss in the amount of $1.76 per share. This was an increase from the $1.08 loss that Zai had reported last year, but it missed the consensus average loss of -$0.71.

Catalyst

The Chinese regulator will approve Zai Lab’s application for NUZYRA approval. This antibiotic is being developed by the company to treat community-acquired bacteria pneumonia, acute skin and structure infections, and also community-acquired bacterial bronchitis. They are both two of the most serious infectious diseases in China, as well as the world. Both can cause death or severe morbidity.

QINLOCK, a Chinese drug discovery company launched by Zai Lab in May 2021. This product treats advanced gastrointestinal tumors. It is available to patients who have received other similar therapies in the past. QINLOCK has been approved in China for treatment of advanced gastrointestinal stromal tumors.

After its launch, it added significant revenue to the quarter’s year-over-2018 increase of 15%. It almost matches the contribution made by Optune when you consider the time that each drug had been available on the marketplace.

These results give hope that Zai Lab’s net profits and total revenues will increase significantly in the future.

Analysts’ Estimates on Total Revenues and Earnings

An analyst estimates that revenues will grow by 220.40% – $156.85million in full 2021 and by 140.20% – $376.77million in full 2022.

The bottom line should improve beginning in 2022.

Wall Street’s Take

Three Wall Street analysts issued ZLAB’s 12-month price target in the last three months. Zai Lab has an average target price of $215.67. This translates into 111.98% upside. Based on three Buy ratings, the analyst consensus rating is Strong Buy.

Summary

The stock hasn’t performed well for the past three month, however, growing sales could be a key share price driver. This stock can act as a catalyst to trigger a major rebound.

Disclosure: Alberto Abaterusso didn’t hold any position at the time this article was published.

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