'Waiting Game Continues' In Emergent BioSolutions, Analysts Cut Price Target

'Waiting Game Continues' In Emergent BioSolutions, Analysts Cut Price Target
  • Emergent BioSolutions Inc's EBS Q3 sales fell 27% Y/Y to $240 million, missing the consensus of $268.30 million.
  • Revenues from CDMO services decreased $76.4 million, largely due to lower combined revenues of $59.1 million from AstraZeneca Plc AZN and Johnson & Johnson's JNJ Janssen, reflecting the impact of reduced production activities for the companies' COVID-19 vaccines. 
  • The company reported an adjusted EPS loss of $(1.27), compared to $(0.36) a year ago and missing the consensus of $(0.06).
  • Related: FDA Issues Warning Letter For Emergent Bio's Manufacturing Facility.
  • Guidance: Emergent BioSolutions forecasts FY22 sales of $1.05-$1.10 billion, down from $1.15-$1.25 billion expected earlier, compared to the consensus of $1.20 billion.
  • Post 3Q22 results, Cantor Fitzgerald, reiterated its Neutral rating and revised the price target to $23 from $33
  • Analyst Reaction: The analyst writes that while on the surface, Emergent BioSolutions' stock looks attractive, trading at ~2x 2022E sales on an EV/revenue basis, there remain multiple overhangs that the company will need to work through. 
  • Narcan continues to do well, but that is a genericized market. The company's medical countermeasures business will remain an integral part but with several overhangs, such as the likelihood and timing of the next option getting exercised.
  • Price Action: EBS shares are down 29.80% at $13.86 on the last check Wednesday.
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