MorphoSys AG (NASDAQ: MOR) is a name that has been making the rounds quite a bit, throughout social media chatter. The last 12 months have been tough on the German biopharmaceutical, seeing a fall of 63%.
Weakening MOR Fundamentals
One reason as to why the stock has been the talk of the town is due to the continuously worsening financial results. Its earnings release consistently indicates that the fundamentals are in line with the broader bearish perception surrounding MOR in the market. Revenue in 2021 fell to almost half from $400 million in 2020, to a mere $204 million. This was in large part due to its foreign sales segment taking a 45% hit, which had severely disrupted the company’s financial performance. This was due to the supply chain disruptions that came about due to the Russian invasion of Ukraine, as well as subsequent sanctions on Russian exports. Moreover, inflationary pressures from the fallout from the Covid-19 pandemic exacerbate MOR’s operations further, which worsened the bearish sentiments around the stock.
A Poor Buyout
Despite all the challenges facing MOR, its single most devastating decision had been the full buyout of Constellation Pharma, which had terribly failed to live up to what the MorphoSys management anticipated. The deal was worth a whopping $1.7 billion, which makes its failure even more consequential to the future of the company. To put the figure into context, the current market capitalization stands at a mere $700 million. The decision saw heavy criticism, owing to it being highly overambitious, with shares crashing upon negative milestone updates. Much of the present woes facing the company can be attributed back to this one move by the company, which has sunk its sailing ship.
MorphoSys is facing an uphill battle, and things will only get tougher from here on. There is little positive catalysts that market participants can latch onto in the foreseeable future. The company would need to power through these uncertain times.