First Berlin – Valneva SE Research Update (03/08/2018)

First Berlin Equity Research has published a research update on Valneva SE (ISIN: FR0004056851). Analyst Simon Scholes reiterated his BUY rating and decreased the price target from EUR 6.00 to EUR 5.80.

On 2 August Valneva published H1/18 results and held a conference call. The company reported a good set of results, which were slightly below our estimates largely due to negative currency impact. Total group revenues increased y/y by 9.4% (+16.4% at CER or constant exchange rates) in H1/18 and amounted to €59.0m (FBe: €59.7m; H1/17: €53.9m). Product revenues increased by 11.4% (+18.6% at CER) to €53.5m (FBe: €53.7m; H1/17: €48.1m). EBITDA came in at €5.8m, lower than our estimate of €7.2m (H1/17: €7.6m), chiefly due to timing of R&D expenses and typical quarterly volatility. Management confirmed operating guidance for 2018 but following the conference call, we have adjusted our cost forecasts upward for 2018 and subsequent years. For 2018 our EBITDA forecast at €5.2m (previously: €7.6m) is now closer to the lower end of the guidance range of €5-10m. Adjustments to our cost forecasts reflect higher marketing expenditure in connection with increasing commercialisation efforts in the US. We also pencil in higher R&D costs to reflect the likelihood that the company will be running phase II trials in both Lyme disease and Chikungunya in 2019 and 2020. Following these adjustments, we now see fair value for the Valneva share at €5.80 (previously: €6.00). We maintain our Buy recommendation.