(Bloomberg) -- This month’s near 50% rally in Bavarian Nordic A/S shares is nothing unusual for the Danish vaccine developer. But then again, neither are the falls that have often followed.
The stock is on track for its biggest monthly advance since July 2022 following a lethal outbreak of mpox in Africa, with Bavarian Nordic one of just a few companies having an approved vaccine. But even with this month’s gains, the stock is trading roughly 30% below its 2022 peak.
Over the past decade, Bavarian Nordic shares have benefited, then suffered from failed forays into the realms of prostate cancer, respiratory syncytial virus and Covid-19. Meanwhile, its shot to protect against smallpox and mpox continues to be its key commercial product, making up 45% of the company’s revenue in the first six months of this year.
“Our eyes are on the evolving smallpox/mpox outbreak,” Suzanne van Voorthuizen, an analyst at Van Lanschot Kempen, said in a note. She and her colleagues are “looking for the widely anticipated additional orders for vaccine doses to materialize.”
Keeping up with demand will be crucial. Bavarian Nordic shares surged 54% in July 2022, when the head of the World Health Organization declared the outbreak of mpox — then called monkeypox — a public health emergency. But most of those stock gains were erased over the following two months, with the company struggling to meet surging demand for the vaccine.
Costly Shots
One of the challenges with the mpox outbreak is the cost of the shots. Africa is the only continent where the disease is endemic, but it needs about $4 billion to fight it. At about $100 per dose, according to Jean Kaseya, the head of Africa’s main health-advisory body, most countries simply can’t afford it.
Despite previous setbacks, Bavarian Nordic shares have almost tripled in value under the 10-year leadership of Chief Executive Officer Paul Chaplin. The company has bulked up its portfolio of travel jabs in recent years, and is awaiting US and European approval for its chikungunya shot — a market that is estimated to exceed $500 million annually by 2032.
A spokesperson for Bavarian Nordic declined to comment on the share-price developments.
Analysts are broadly optimistic about the company’s prospects. Among those tracked by Bloomberg, five recommended buying the stock, two had hold ratings and none said sell, as of Tuesday’s close.
“The current share price massively undervalues likely cashflows” from the smallpox and mpox vaccine, the travel vaccines portfolio, and chikungunya opportunity, Citigroup Inc. analyst Peter Verdult wrote in a note last week. “The scope for shareholder returns to improve, via dividends and/or buybacks, is on the table from 2025.”
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