Wall Street Expects Editas Medicine to Soar 53%. Is It Time to Buy Now?

Investors looking for stocks that can produce dramatic gains in a short amount of time will want to turn their heads toward the biopharmaceutical space. Chasing short-term gains isn't the smartest way to invest, but hardly a month goes by without at least one stock from this industry shooting through the roof as the drugs it develops cross important milestones.

The average Wall Street analyst following Editas Medicine (NASDAQ: EDIT) thinks the gene therapy stock can reach $3.25 per share in the next year. From recent prices, this implies a gain of about 53% over the next 12 months.

Shares of Editas Medicine have more than doubled since briefly falling below $1 per share in April. Before rushing out to buy the stock in hopes it can surpass analysts' estimates and double investors' money again, you should know the stock has fallen more than 97% from the peak it set in 2021. What can investors make of all this?

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Why Editas Medicine's stock price is way down

Editas Medicine is one of several drugmakers pursuing new therapies that employ CRISPR gene-editing techniques to revise, remove, or replace troublesome sections of a patient's genetic code.

Instead of pills or shots that patients take regularly, Editas' candidates are designed to permanently alter DNA with a single administration. Unfortunately, launching once-and-done treatments isn't as predictable as investors want it to be.

The first CRISPR-based treatment, Casgevy from CRISPR Therapeutics, earned approval from the Food and Drug Administration (FDA) in December 2023. Sales of the once-and-done treatment have been extremely disappointing. In the first quarter of 2025, CRISPR Therapeutics' collaboration partner, Vertex Pharmaceuticals, reported Casgevy sales that reached just $14.2 million.

Casgevy is an ex vivo treatment, which means gene editing is performed outside of the body. Editas had been developing a treatment similar to Casgevy called reni-cel, but abandoned the program last year because it couldn't find a collaboration partner.

Last year, Editas laid off nearly two-thirds of its staff and shifted its focus to in vivo gene-editing treatments that edit DNA inside the body. While in vivo treatment seems like a step in the right direction, it also raises the risk of unintended consequences caused by off-target gene editing.

A new focus on in vivo candidates also means the company has to start from scratch. After abandoning its ex vivo programs, Editas has zero candidates in clinical-stage testing.

Why Wall Street is bullish on Editas Medicine

Earlier this month, Editas Medicine reported success with a targeted lipid nanoparticle given to nonhuman primates. If the success carries over to humans, it could eventually lead to an in vivo treatment for sickle cell disease and beta thalassemia.

In addition to the Cas9 enzyme that nearly all its CRISPR-focused peers use as a pair of molecular scissors, Editas Medicine is alsso developing Cas12a, a similar enzyme that appears more accurate.

The biggest reason Wall Street analysts tasked with following Editas Medicine expect the stock to climb is its extremely low valuation. When the market closed on June 26, the company's market cap was just $177.5 million.

At the end of March, Editas Medicine had $221 million in cash on its balance sheet. In other words, the stock is trading for significantly less than the amount of cash the underlying business has in the bank.

Reasons to remain cautious

Buying shares of a company for less than the cash on its balance sheet might seem like a safe bet. In this case, it isn't.

Editas Medicine thinks its cash balance will last into the second quarter of 2027. If Editas doesn't have successful clinical data to share by that time, though, it could be forced to severely dilute shareholders' existing stake with a secondary offering.

Traditionally, drugmakers deliver gene therapies to target cells via viral vectors. Pumping patients full of a virus, though, can cause a bigger problem than the original treatment was supposed to fix. A relatively innocuous lipid-nanoparticle (LNP) that can deliver therapies to target cells could be worth several times more than the company's present cash balance. Unfortunately, Editas obtained its LNP through a non-exclusive license with Genevant Sciences. Licensing the technology to a larger pharmaceutical company probably isn't an option for Editas.

Any one of the preclinical-stage candidates that Editas is developing could drive this stock's market cap back up over $1 billion, if it produces compelling data. With nothing but preclinical hints, though, betting on success is a bigger risk than most individual investors should be comfortable with. It's best to watch this stock from a safe distance until there is clinical data to evaluate.

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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CRISPR Therapeutics and Vertex Pharmaceuticals. The Motley Fool recommends Editas Medicine. The Motley Fool has a disclosure policy.