Emergent Biosolutions (EBS) stock has not performed as expected in the past year, underperforming the overall market significantly. Its shares have dropped nearly 50% over the past 12 months.
I believe this stock has the resources to make it worth waiting for. Therefore, I remain bullish on this stock, regardless of the past year’s performance. (See Analysts’ Top Stocks on TipRanks)
Emergent BioSolutions is headquartered in Gaithersburg, Maryland, and its managers organize life science activities to address public health threats timely through the provision of specific products and services.
These can be bacteriological, radioactive, or nuclear threats, and also, the onset of health emergencies due to the spread of viruses such as COVID-19.
Q3 Earnings
In the third quarter of 2021, total revenues were $329 million, which compared to the same quarter of 2020, marked a nearly 15% drop.
Lower revenues were essentially due to fewer lease revenues and a decrease in activities associated with the treatment of COVID-19.
In the quarter, the company endured a proforma net loss of $0.36 per share, missing the average consensus by $2.64.
A Stronger Portfolio
During the quarter, the company has secured renewals of multiple agreements regarding the provision of medical antidotes for the treatment of public health threats.
These include an agreement for its mRNA-based COVID-19 vaccine worth $90 million, and another agreement for its anthrax vaccine candidate to deliver to the Strategic National Stockpile over the next 1.5 years. The second contract has a value of nearly $400 million, securing several years of tax relief and an exclusive right on the anthrax infection.
Now the portfolio is strong enough to accompany Emergent Biosolutions through its plans for higher revenues.
Lastly, a trial will evaluate the safety and efficacy of the company’s hyperimmune intravenous immunoglobulin-based treatment for outpatients with COVID-19. This embeds a strong upside potential for the share price, should the trial be successful.
For full-year 2021, the company guides for total revenues of $1.7 billion to $1.8 billion versus analysts’ projections of $1.61 billion to $1.78 billion.
Wall Street’s Take
In the past three months, four Wall Street analysts have issued a 12-month price target for EBS.
The average Emergent Biosolutions price target is $61, implying 44.4% upside potential. The company has a Moderate Buy consensus rating, based on two Buys and two Holds assigned.
Summary
Shareholders have been disappointed by the poor share price performance over the past 12 months. In the meantime, the company has actively worked to strengthen its core business, laying robust foundations for higher revenues. The treatment candidate for COVID-19 outpatients bears a strong upside potential.
Disclosure: At the time of publication, Alberto Abaterusso did not have a position in any of the securities mentioned in this article.
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