On Tuesday, Barclays (LON:BARC) began coverage on Swedish Orphan Bio (SOBI:SS) (OTC: SWTUY), assigning the stock an Overweight rating and setting a price target of SEK 380.00. The new rating comes after the company's stock suffered a significant drop on November 15, attributed to political developments in the United States.
The nomination of vaccine-skeptic RFK Jr to head the US Department of Health and Human Services sparked concerns due to Swedish Orphan Bio's dependency on royalty income from its respiratory syncytial virus (RSV) product, Beyfortus.
Despite the initial market reaction that saw the company's shares fall by 10.1% compared to the 2.9% drop in the SXDP, Swedish Orphan Bio's stock has since regained some of its value. However, it still trades 8% lower than the pre-US election highs. This performance aligns with the broader pharmaceutical sector's cautious stance amidst uncertainty about the potential policy changes from the Trump administration.
Throughout the fiscal year 2024, Swedish Orphan Bio has consistently exceeded consensus earnings per share (EPS) forecasts, including double-digit percentage beats in the second and third quarters. This strong financial showing underscores the firm's solid performance despite the political headwinds.
Barclays' analyst notes that while the direction of US vaccine policy under the new administration is not yet clear, any significant policy shifts are likely to face implementation challenges. This perspective suggests that the current market valuation of Swedish Orphan Bio presents an attractive opportunity for investors.
The Overweight rating reflects Barclays' positive outlook on the stock, anticipating that Swedish Orphan Bio will outperform the average total return of the stocks covered by the analyst's sector over the next 12 to 18 months. The set price target of SEK 380.00 represents a potential upside from the stock's current market price.
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