Argus: Anthrax Vaccine Maker Emergent BioSolutions Poised For Earnings Growth

Emergent Biosolutions Inc EBS, a maker of vaccines and products for infectious diseases as well as chemical, biological or nuclear attacks, picked up a sell-side bull Wednesday. 

The Analyst

Argus analyst Mike Jaffe initiated coverage of Emergent BioSolutions with a Buy and $62 price target.

The Thesis

With the only FDA-approved anthrax vaccine, BioThrax, Emergent BioSolutions is on track to report solid earnings growth over the next several years, particularly due to strong demand from the U.S. military, Jaffe said in the initiation note. 

Argus projects that Emergent BioSolutions will benefit from recently acquired products such as the ACAM2000 for smallpox, as well as from its new product pipeline and strong cost controls.

The company, which is heavily reliant on the government for much of its revenue, has begun to diversify by developing new products for both government as well as non-government customers and through international expansion, Jaffe said. 

The discounted valuation at which the company's shares trade is warranted, given its overreliance on the U.S. government, the analyst said. That said, the current discount is too deep given expectations for 24-percent earnings growth over the next five years versus 15-percent growth among peers, according to Argus.

The Price Action

Emergent BioSolutions shares have added about 16 percent year-to-date.

At the time of publication, the stock was rallying 1.47 percent to $54.53. 

Related Links:

4 Biotech Stocks To Better Your Financial Health This Winter

Benzinga's Daily Biotech Pulse: vTv Swoons On Failed Alzheimer's Trial, Regenxbio Gets FDA Fast Track For RGX-111