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Factors Behind Vericel Corporation (VCEL) Stock’s Positive Momentum

Soumya Eswaran
·3-min read

Brown Capital Management, an investment management company, released its “The Brown Capital Management Small Company Fund” first quarter 2024 investor letter. A copy of the letter can be downloaded here. The Small Company Fund returned 0.48%, significantly underperforming the Russell 2000 Growth index’s 7.58% return. Following the release of the inflation report in February, the Small Company Fund experienced underperformance as investors shifted away from high-growth companies, impacting their valuations. In addition, check the fund’s top five holdings to know its best picks in 2024.

The Brown Capital Management Small Company Fund highlighted stocks like Vericel Corporation (NASDAQ:VCEL), in the first quarter 2024 investor letter. Vericel Corporation (NASDAQ:VCEL) is a commercial-stage biopharmaceutical company. The one-month return of Vericel Corporation (NASDAQ:VCEL) was -3.71%, and its shares gained 23.63% of their value over the last 52 weeks. On June 24, 2024, Vericel Corporation (NASDAQ:VCEL) stock closed at $46.19 per share with a market capitalization of $2.245 billion.

The Brown Capital Management Small Company Fund stated the following regarding Vericel Corporation (NASDAQ:VCEL) in its first quarter 2024 investor letter:

"Vericel Corporation (NASDAQ:VCEL) develops advanced cell-therapy products for the sports-medicine and severe-burn-care markets. The company currently sells two primary products, and just launched a third. Both primary products use a cell-therapy technology wherein a portion of skin or a biopsy is taken from a patient, sent to Vericel to be processed, and then returned to the patient to be used in aiding treatment. The sports-medicine product, MACI, is used to replace damaged cartilage in the knee, and results in shorter patient recovery times and better long-term results than other procedures. The MACI product accounts for roughly 80% of total company revenue. The burn-care product, Epicel, is a skin graft, which is used for healing patients with severe burns over a significant portion of their bodies. The newly released third product, Nexobrid, is also for burn care and is an ointment used to remove dead burned skin to improve healing.

During the first quarter, Vericel reported earnings results that were above expectations, with revenue up 23% year over year and improved profitability. MACI was the main growth driver with 22% revenue growth, and had the highest number of implants, biopsies and surgeons using it in any quarter since the product launched. The company is approaching 50% penetration of the 5,000 potential surgeons they are targeting. Also, Epicel generated 22% revenue growth and Nexobrid became available in the fourth quarter. The continued growth of Vericel’s core products and the expectations for future revenue from new products drove the positive stock price movement during the quarter."

A lab worker holding a vial of biopharmaceuticals for cellular therapies.

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Vericel Corporation (NASDAQ:VCEL) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held Vericel Corporation (NASDAQ:VCEL) at the end of the first quarter which was 16 in the previous quarter. Vericel Corporation (NASDAQ: VCEL) reported a 25% increase in total revenue for the quarter, surpassing the projected guidance range. In addition, the company has raised its full-year revenue forecast to $238 million to $242 million, citing a strong start to the year. While we acknowledge the potential of Vericel Corporation (NASDAQ:VCEL) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

We discussed Vericel Corporation (NASDAQ:VCEL) in another article and shared Conestoga Capital Advisors' views on the company. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

Disclosure: None. This article is originally published at Insider Monkey.