Emergent Biosolutions' Stock Run Can't Continue Forever, Wells Fargo Says In Downgrade

Specialty biopharma Emergent Biosolutions Inc EBS has seen its stock rise more than 40 percent over the past two years, and investors shouldn't expect to see such outsized returns going forward, according to Wells Fargo. 

The Analyst

Wells Fargo's David Maris downgraded Emergent BioSolutions from Outperform to Market Perform with a new $56 price target.

The Thesis

Investors who hold shares of Emergent BioSolutions should maintain their position, as the company continues to execute well and is backed by a management team with a reputation of overdelivering on promises, Maris said in the downgrade note. (See the analyst's track record here.) 

Emergent BioSolutions is unlikely to see an impact from potential drug pricing pressures, as its products are not standard prescription products and include treatment for chemical and biological threats, the analyst said. 

Despite the company's solid performance over the year, including a dramatic expansion and diversification of its business, the stock's valuation takes precedence, Maris said. The analyst said he's prepared to reassess Wells Fargo's new neutral position if it's warranted by Emergent BioSolutions' earnings or business development activity.  

Price Action

Shares of Emergent BioSolutions were trading lower by 3.67 percent near the end of Wednesday's trading session. 

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