Analysts upgrade Vir Biotechnology, say shares will double post Covid

In the future, Goldman Sachs predicts that the value of Vir Biotechnology's shares might more than double.

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According to analyst Paul Choi, the immunology company will announce fresh flu vaccine data in the coming year that might propel growth for the biotech stock. He upgraded the stock from neutral to buy and increased his price objective. According to Vir, the antibody therapy, known as VIR-2482, provides users with a comprehensive defense against flu strains that may last the whole of a flu season.

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“We expect VIR-2482 (intramuscularly injected monoclonal antibody for influenza prophylaxis/prevention) data to be released in mid-2023. In a note to clients Tuesday, Choi said that “we expect materially higher revisions to consensus estimates as a result of meaningfully better efficacy than currently approved flu vaccines and competitor pipeline vaccines.”

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“Because vaccine efficacy varies greatly from year to year and wanes over time, VIR’s approach to targeting a highly conserved (>98%) portion of the flu virus hemagglutinin stem avoids having to predict which strains will dominate each flu season.

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In October 2019, Vir Biotechnology launched its initial public offering, selling shares at $20. The biotech stock performed well during the pandemic as it created Covid therapies; it increased by more than a factor of two in 2020 and by more than a factor of five in 2021. Then, in 2022, it fell by about 40%. The biotech stock is up 1.7% in 2023, but it still lags behind the S&P 500.

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Yet, the analyst anticipates that shares might soar this year on a post-Covid story, increasing by more than 105% to the analyst's $53 12-month price objective. From $41, the price target was increased. In premarket trade on Tuesday, Vir shares are up approximately 5%.

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The adjustments to VIR-2482 that result in a higher potency (ADCC) and a longer half-life "could give sufficient serum coverage much above EC90 across a flu season," Choi said. Notwithstanding the fact that earlier (post-exposure) antibody challenge experiments have been unsuccessful.

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The company will undoubtedly need to resolve any remaining concerns around pricing. Nonetheless, Vir's expansion may be supported by the new vaccine findings.

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"With VIR-2482 accounting for about 20% of consensus 2030 risk-adjusted sales (mostly hep B), we believe that the current value offers an attractive risk/reward ratio. Upgrade to Buy with a new 12-month PT of $53 (up from $41), according to Choi's letter.