JPMorgan says this biotechnology stock can rally nearly 50% because of its drug pipeline

Published Mon, Mar 6 20239:48 AM EST

Vir Biotechnology has an underappreciated opportunity in the flu prevention market, JPMorgan said. Analyst Eric Joseph upgraded the stock to overweight from neutral. He shaved $1 off his price target to $34, which still implies an upside of 48.9% from Friday's close. "Vir Biotechnology holds long-term pipeline opportunities across multiple infectious disease indications including hepatitis B, and Influenza A," he said in a note to clients Monday. Joseph said the company could play a role in preventing the flu among the high-risk, older-adult population, which has a peak market value of $3 billion. The population has been considered underserved by already-available flu prevention measures, with adults older than 65 accounting for 44% of hospitalizations and more than 70% of deaths related to the virus in the U.S. and European Union each year. The medicine, if approved, also should have a path to being given in conjunction with the typical seasonal vaccination. He said the stock could see upside when the latest Peninsula study data hits, given it's expected to be a linear read-through from the young adult-focused earlier study. The stock could see a more than 50% upside from the study, he said, but could all fall as much as 10% if the data does not live up to expectations. The company may need to provide more visibility on RNA for shares to move more on just the trial, Joseph added. Joseph forecasted a 2027 product launch with peak net collaboration revenue of $950 million. That comes out to $5 per share. Meanwhile, the company is also making headway on its hepatitis B franchise, with a forecasted launch expected in the U.S. in 2028. It could bring peak revenue of $3.3 billion, which comes out to about $10 to $12 per share after accounting for royalty and milestone obligations and assuming a 30% probability of success. New data is expected to come in the second half of 2023. Joseph also excluded revenues from sotrovimab, a drug used to treat acute issues stemming from Covid, after the first half of 2023 given the decreasing need as more people get vaccinated. The stock gained 6.7% in the premarket. But the stock is down 9.8% this year, building on last year's 39.6%. The stock has whiplashed in its first years as a publicly traded company, recording advances of 113% and 56.4% in 2020 and 2021, respectively. VIR ALL mountain Vir — CNBC's Michael Bloom contributed to this report.