Goldman Sachs upgrades Vir Biotechnology, says shares can more than double post-Covid

Published Tue, Feb 21 20236:04 AM ESTUpdated Tue, Feb 21 20236:24 AM EST

Vir Biotechnology shares can more than double going forward, according to Goldman Sachs. Analyst Paul Choi upgraded the stock to buy from neutral, and raised his price target, saying the immunology company will release new flu vaccine data in the year ahead that could drive growth for the biotech stock. Called VIR-2482, the antibody treatment offers users broad protection against flu strains that could last the entirety of a flu season, according to Vir. "VIR will report VIR-2482 (intramuscular injected monoclonal antibody for prophylaxis/prevention of influenza A) data in mid-2023, which we expect to show meaningfully better efficacy than currently approved and rival pipeline-stage flu vaccines and consequently to drive material upward revisions to consensus estimates," Choi said to clients in a Tuesday note. "Given vaccine efficacy varies greatly year to year (US average: ~40% [range: 10%-60%]) and wanes over time, VIR's strategy of targeting a highly conserved ( > 98%) region of the flu virus hemagglutinin (HA) stem avoids having to predict which strains will be prevalent each flu season," Choi added. Vir Biotechnology went public in October 2019, pricing its initial offering at $20 per share. The biotech stock did well during the pandemic as it developed Covid treatments ; it more than doubled in 2020, and surged more than 50% in 2021. Then, in 2022, it tumbled near 40%. In 2023, the biotech stock is slightly higher, up 1.7%, still underperforming the S & P 500. Still, the analyst expects that shares can surge this year on a post-Covid story, rising more than 105% to the analyst's 12-month price target of $53. The price target was raised from $41. Vir shares are about 5% higher during Tuesday premarket trading. "While previous (post-exposure) antibody challenge studies have failed, the modifications to VIR-2482 that result in increased potency (ADCC) and a longer half-life should provide sufficient serum coverage well above EC90 over a flu season," Choi wrote. To be sure, the firm will have to address questions that remain around pricing. Regardless, the new vaccine data has the potential to bolster growth for Vir. "With VIR-2482 representing < 20% of consensus 2030 risk-adjusted sales (mostly hep B), we see a real second, post-COVID leg to the story emerging and think the current valuation presents a compelling risk/reward. Upgrade to Buy with a new 12-month PT of $53 (from $41 prior)," Choi wrote. —CNBC's Michael Bloom contributed to this report.