Zacks recommends small-cap drugmaker BioStem that has sunk 30% in three weeks

Zacks Small-Cap Research (Zacks SCR) reiterated its recommendation on placenta-based drug maker BioStem Technologies, citing the company’s record top line in the fourth quarter of 2024, combined with a stream of positive news and an expected uplisting of its stock to Nasdaq’s main bourse. Amid losses of 30% for BioStem in less than three weeks, Zacks SCR sees upside of almost 150% for the stock.

Zacks SCR believes investors should take a closer look at BioStem stock and consider adding it to their portfolios.

According to the company's preliminary fourth-quarter financials, revenue skyrocketed 794% year over year to a record $102.9 million. Moreover, as Zacks SCR notes, BioStem continues to release positive news. Yesterday, February 24, it announced regulatory approval for a clinical study of its drug for venous leg ulcers to assess its efficacy versus existing treatments. Zacks SCR adds that the company had previously published a peer-reviewed study showcasing breakthrough results regarding the application of this treatment for diabetic foot ulcers.

Additionally, BioStem is preparing for an uplisting to Nasdaq’s main exchange (its shares are currently traded over the counter). Zacks SCR expects this to improve the stock's liquidity.

In less than three weeks, BioStem stock has dropped almost 30% in OTC trading to $13.21 per share. Despite this decline, it is still up almost 52% in the last 12 months. Zacks SCR believes the stock still has a long growth runway and has set a target price of $32.50 per share — almost 2.5 times the February 24 closing price.

BioStem Technologies was founded in 2014 by Mazda Factory Race Team mechanic Jason Matuszewski, former U.S. Marine Andrew Van Vurst, and his father, Chip Van Vurst, a professional race car driver and two-time brain tumor survivor. After traditional treatments caused side effects, the father-and-son duo explored alternative options, leading to the creation of BioStem. The company develops and makes perinatal tissue-based drugs for regenerative therapies. Its products are used to form a protective covering for complex wounds and severe burns, for example.

Several BioStem products are already available on the market, with sales handled by its partner, Venture Medical. The partnership has revolutionized BioStem’s distribution capabilities, enhanced visibility within the market, and accelerated product adoption, the company claimed in its preliminary fourth-quarter financials.