Cowen Upgrades Bavarian Nordic on Anticipation of Stockpiling Contracts

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A Cowen analyst upgraded shares of Bavarian Nordic (OTC:BVNRY) to Outperform from Market Perform, setting a price target of DKK 433 on the “anticipation of new Jynneos stockpiling contracts ex-U.S. in ’23 and ’24.”

“A 1.5M EU contract was announced on July 19th. The WHO is meeting on July 21st to determine if this monkeypox outbreak will be considered a public health emergency, and we expect that it will,” said the analyst. Regardless of the WHO decision, our upgrade is predicated on EU countries deciding that scrabbling for vaccine in an outbreak scenario is not acceptable, and that they should have a stockpile for future potential orthopox outbreaks.”

Cowen anticipates EU stockpiling contracts with the potential to vaccinate 10% of the population to start, with countries not stockpiling being “at the end of the line” for vaccines in any future outbreak.

“Our price target of DKK 433/share is derived based on an NPV analysis. We estimate FY23 revenue of DKK 14.4B, FY24 of DKK 14.2B, and FY25 of DKK 11.7B. We have estimated production costs of ~65% of revenue over the next three years and then holding stable ~55%,” said the analyst.

“We see multiple potential upsides to our model, including a) EU may select a vaccination target of greater than 10% of the population, b) stockpiling based on 2 doses per person instead of 1, c) US Government may significantly increase its 7MM stockpile target of Jynneos, d) Ex- EU and Ex-US countries may decide to stockpile Jynneos, e) improved economics as G&A and distribution costs likely remain relatively low as the revenue increases.”

Bavarian Nordic stock rallied 12.5% in Wednesday’s session.