In a note, SVB Leerink warns that the current $115B aggregate valuation for COVID-19 vaccine developers is, unsurprisingly, overly optimistic.
Analysts, led by Daina Graybosch, claim that the lofty estimates assume vaccines will be administered every two years in perpetuity at a price north of $37 per American and that global vaccination rates will exceed those for influenza. Current valuations also reflect more government contracts for excess supply and profits similar to branded medicines.
Ms. Graybosch adds, “The initial coronavirus vaccination campaign will need to be 86% larger than global influenza vaccination and much more profitable just to support the current valuation, by our estimates.” Any shortfall on these assumptions “materially lowers the expected value of this portfolio of products.”
She is not totally bearish on the group, raising her price target on BioNTech (BNTX -5.1%) to $69 (from $42) after “reassessing” its chances of success. The U.S. government’s decision on its option to purchase 500M more doses of its vaccine could swing shares by $10 in either direction.
Analyst Mani Foroohar trimmed his peak sales estimate for Moderna’s (MRNA -3.2%) vaccine to $2.9B from $5.0B citing expected intense competition and risks to its premium pricing strategy.
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