jwesth @jwesth: "𝙎𝙤𝙡𝙞𝙙 𝙧𝙚𝙨𝙪𝙡𝙩𝙨 𝙛𝙧𝙤𝙢 𝘽𝙖𝙫𝙖𝙧𝙞𝙖𝙣 𝙉𝙤𝙧𝙙𝙞𝙘,..."

United Kingdom

Edited

𝙎𝙤𝙡𝙞𝙙 𝙧𝙚𝙨𝙪𝙡𝙩𝙨 𝙛𝙧𝙤𝙢 𝘽𝙖𝙫𝙖𝙧𝙞𝙖𝙣 𝙉𝙤𝙧𝙙𝙞𝙘, 𝙗𝙪𝙩 𝙘𝙖𝙣 𝙩𝙝𝙚 ‘𝙢𝙥𝙤𝙭 𝙫𝙖𝙘𝙘𝙞𝙣𝙚 𝙥𝙧𝙚𝙢𝙞𝙪𝙢’ 𝙝𝙤𝙡𝙙? ⚕️ Danish vaccine manufacturer $BAVA.CO (Bavarian Nordic A/S) delivered solid first half-year results this morning with higher-than-expected revenue and operating profit and confirmation of their upper 2024 guidance. This follows yesterday's announcement of a contract for 440,000 doses of mpox vaccine. This positive news string has increased the share price by over 13% this morning. 📈 While today's results support the underlying long-term business, it's news about the mpox vaccine in particular that has driven the share price over the past few weeks. 🐒 Following the World Health Organisation's (WHO) declaration of the mpox outbreak as a global health crisis on 13 August, Bavarian Nordic's share price experienced a significant surge from just under DKK 200 to around DKK 280 in a few days. The company's unique position as the sole provider of an approved mpox vaccine has positioned it as a key player in the market. Investors are optimistic about the potential increase in sales and earnings. 💪 With the wild price increases, the company's market capitalisation has risen from around DKK 15 billion to DKK 21 billion in just a few days, and the market is thus factoring in an additional 'mpox vaccine premium' of around DKK 6 billion. 💉 However, the uncertainty surrounding the future earnings from the mpox vaccine is inherently huge. Sales are directly affected by disease outbreaks and larger single orders occasionally. Bavarian Nordic now expects mpox vaccine sales of approximately DKK 3 billion for the full year 2024, the majority of which was already recognised before the recent outbreak and DKK 1 billion was delivered in the first half of the year. 💵 This should be seen in light of the recently priced-in 'mpox vaccine premium' of approximately DKK 6 billion. A premium that seems reasonable to the extent that Bavarian Nordic will see additional mpox vaccine sales in the coming years. However, if it just leads to additional mpox orders in the short term, the premium may prove overvalued. What really adds value to a stock is the revenue and earnings that come year after year. 📉 Therefore, the stock will also be extremely sensitive to news about the mpox outbreak for the next while. We've been here before. During the mpox outbreak back in 2022, Bavarian Nordic saw its share price go from around DKK 250 to a peak of almost DKK 400 in a matter of weeks. This was followed by a sharp correction, with the share price falling back by 40%. $LLY (Eli Lilly & Co) $NOVO-B.CO (Novo Nordisk B A/S) $NVO (Novo-Nordisk A/S SPONS ADR) $ROG.ZU (Roche Holding Ltd) $GSK (GlaxoSmithKline plc ADR) $GSK.L (GlaxoSmithKline) $AMGN (Amgen Inc) $GMAB.CO (Genmab A/S) $AZN (AstraZeneca PLC ADR) $EBS (Emergent BioSolutions Inc)

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