First Berlin – Valneva SE Research Update (24/11/2017)

First Berlin Equity Research has published a research update on Valneva SE (ISIN: FR0004056851). Analyst Christian Orquera reiterated his BUY rating and maintained his EUR 3.90 price target.

On 9 November, Valneva reported 9M/17 figures and held a conference call. Although sales were slightly above our estimates, EBITDA amounted to €12.3m and was significantly above the previous year's figure and our forecast (9M/16: €3.5m, FBe: €8.2m). The main reason for the excellent result was a significant increase in the gross margin due to economies of scale. Consequently, Valneva increased its EBITDA guidance to €10-13m (previously: €5-10m). We have raised our 2017E projections to €11.5m (previously: €9.9m). Further, the company announced a change in its licensing strategy with the lead programme C.diff. Valneva intends to wait until a first competitor vaccine receives approval and then conduct a head-to-head non-inferiority Phase III trial against the competitor's product. Considering that this type of trial is significantly less risky and expensive, the revised development strategy makes sense. Our updated SOTP valuation model still yields a €3.90 price target. We reiterate our Buy rating.