Supply Shortage Plagues Shares of Cerus Corporation (NASDAQ:CERS)

Cerus Corporation (NASDAQ:CERS)

Cerus Corporation (NASDAQ:CERS)

Shares of Cerus Corporation (NASDAQ:CERS), headquartered in Concord, CA,  have fallen below their 52-week low but, strangely, the drop in CERS price has little to do with Cerus. At the center of the stock’s fall is the news that Cerus’ revenues will be impacted by a pending supply shortage of a platelet additive solution (PAS) – blood centers cannot utilize Cerus’ INTERECPT system without the PAS. Fresenius Kabi is the manufacturer and supplier of the platelet additive solution (PAS) in question. Fresenius discontinued the manufacturing of a plastic component used in the PAS container before receiving FDA approval for the new plastic component. It is the delay in the FDA approval process that has forced the biomedical products company to notify blood centers of the PAS supply shortages needed for their INTERCEPT blood system.

Cerus Corporation (NASDAQ:CERS)’s INTERCEPT system is designed to reduce risks associated with blood transfusions. The INTERCEPT system deactivates a wide range of pathogens that may be present in the blood. The INTERCEPT platform involves the nucleic targeting of transfusion threats such as Hepatitis B and C, HIV, West Nile as well as other pathogens.

After having been notified of the coming shortage of PAS for the INTERECPT blood system, Cerus Corporation (NASDAQ:CERS) provided a revenue update to the market. Revenue guidance is now given between $38 – $46 million as opposed to previous guidance of $43 – $48 million.

The market took the news hard and punished shares of Cerus Corporation (NASDAQ:CERS). CERS shares closed Monday at $3.00 and are down over 20% as of 3 PM EST at $2.30 on volumes over ten times normal (over 7 million shares). More bad news was the last thing Cerus shareholders needed. The stock already suffered a 20% drop in early May after a disappointing earnings announcement. CERS shares are down over 27% for the month and over 31% YTD. Predictably, CERS has a Relative Strength Index (RSI) figure of 17.45. Many traders assign an RSI value below 20 as an indication of an “oversold” condition.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: James Marion is a University of Houston student studying Business with a concentration in Finance

Author: James Marion

James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

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