The chemical company has jumped in value after signing a contract with Pfizer to supply material for its COVID-19 vaccine
() was downgraded to ‘underweight’ from ‘neutral’ by JP Morgan as analysts think the stock is too expensive.
Shares were up 7% on Tuesday on the back of an agreement with Inc. () to supply excipients, which are substances than improve the efficacy and delivery of the active pharmaceutical ingredients in a drug, to manufacture the US pharma company’s COVID-19 vaccine candidate.
These excipients come from the UK chemical company’s recent acquisition of Avanti Polar Lipids.
According to the investment bank, the deal should be value-neutral as it will likely result in an earn-out payment of up to US$75mln to the previous owners of Avanti, which should broadly offset the three years’ earnings contribution from this vaccine.
The underlying earnings (EBIT) contribution should be around £25mln in the year to December 2021.
JP Morgan upgraded the target price to 5,700p from 4,250p which still implies a 15% downside potential.
“The stock reaction yesterday seems excessive to us… Fundamentally, we like the company but not the valuation,” analysts commented.
Shares dipped 2% to 6,549.19p on Wednesday morning.
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