MREO Should I Buy
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Mereo BioPharma Group PLC (MREO) is not a good buy for a beginner, long-term investor with $50,000-$100,000 available for investment. The stock has significant negative catalysts, including failed Phase 3 trials, multiple class action lawsuits, and deteriorating financial performance. Additionally, technical indicators and analyst sentiment are bearish, with no proprietary trading signals suggesting a buy opportunity.
The stock's technical indicators are bearish. The MACD is above 0 but positively contracting, suggesting weakening momentum. The RSI is neutral at 34.867, and the moving averages are bearish (SMA_200 > SMA_20 > SMA_5). Key support levels are at $0.366 and $0.333, with resistance at $0.42 and $0.473. The stock is trading below its pivot point of $0.42, indicating downward pressure.
The FDA recently endorsed bone mineral density (BMD) as a valid surrogate endpoint in osteoporosis, which could support a potential path to market for setrusumab despite the failed trials.
Significant negative catalysts include the failure of Phase 3 ORBIT and COSMIC trials to achieve statistical significance on primary endpoints, multiple class action lawsuits alleging securities fraud, and a sharp reduction in analyst price targets and ratings. Additionally, the company's financial performance is deteriorating, with a 53.18% YoY drop in net income and a 50% YoY drop in EPS.
In Q3 2025, Mereo BioPharma reported zero revenue, a net income loss of $7.02 million (down 53.18% YoY), and an EPS of -$0.01 (down 50% YoY). Gross margin remained flat at 73.4%. The company is struggling financially, with no clear growth trends.
Analyst sentiment is overwhelmingly negative. Multiple firms, including Cantor Fitzgerald, BTIG, Baird, and Jefferies, have downgraded the stock and significantly reduced price targets, citing the failure of Phase 3 trials and increased risk in the company's pipeline. Current price targets range from $0.50 to $3, down from previous targets as high as $8.
