On Wednesday, Deutsche Bank (ETR:DBKGn) revised its stance on Swedish Orphan Bio (SOBI:SS) (OTC: SWTUY), downgrading the stock from Hold to Sell and adjusting the price target to SEK250 from SEK285. The decision follows the company's second-quarter earnings report and updated guidance, which featured strong results and a raised forecast. Despite the positive second quarter, concerns were raised regarding the underperformance of Vonjo and mixed signals about the company's margin outlook.
The analyst noted that while the second quarter did see expected improvements in Long Duration Drivers (LDD) sales, margins remained stagnant. Additionally, although there was less interest in business development and improved cash generation after a disappointing few years, Vonjo's performance continued to be lackluster. The mixed results have presented a challenge in evaluating the company's prospects.
Swedish Orphan Bio's portfolio, which includes products like Kineret, Gamifant, Doptelet, and Specialty, has shown more consistent delivery. The analyst anticipates that the respiratory syncytial virus (RSV) vaccine Beyfortus will likely see increased capacity this winter and that Altuvoct is nearing its rollout in the European Union. However, the concerns surrounding Vonjo, described as an "impaired asset," have led to the adjustment in the stock's rating and price target.
The updated price target of SEK250 represents a downward revision from the previous SEK285, reflecting the bank's reassessment of the company's valuation following the recent developments. The downgrade to Sell suggests that Deutsche Bank advises investors to divest their holdings in light of the potential challenges and uncertainties facing Swedish Orphan Bio.
In other recent news, Swedish Orphan Bio has been the focus of analysis from Berenberg and RBC Capital Markets, both of which have maintained positive ratings on the company's stock.
Berenberg's Buy rating is driven by Swedish Orphan Bio's strong position in the haemophilia market, particularly its innovative therapy, Altuviiio/Altuvioct, which recently secured EU approval. This development is expected to significantly contribute to the company's net present value, with revenue projections for 2024-2027 in the haemophilia sector estimated to be 1-8% higher than the consensus.
RBC Capital Markets has reiterated an Outperform rating on Swedish Orphan Bio, highlighting the company's diversified portfolio of growth drivers that are anticipated to support a 15% compound annual growth rate in EBITDA over the midterm. Despite expectations of a subdued second-quarter performance, RBC Capital emphasized that these temporary factors should not affect the company's full-year or mid-term outlook.
These recent developments underscore the importance of looking beyond immediate quarterly results, as temporary factors do not alter the long-term financial expectations for Swedish Orphan Bio.
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