BAVA: Mpox Preparedness Contracts Will Underpin Stronger Long Term Earnings Power

Analysts have raised their price target on Bavarian Nordic from approximately $225 to about $250. This reflects a higher justified valuation multiple despite expectations for softer revenue growth and margins.

What's in the News

• Officials in Southern California have confirmed the first local community spread of the more virulent clade 1 mpox strain, highlighting ongoing global demand for smallpox and mpox countermeasures (NBC).
• Bavarian Nordic won a new joint procurement contract with the European Commission through HERA, enabling European countries to purchase up to 8 million doses of its MVA-BN smallpox and mpox vaccine over up to four years.
• An initial order for 750,000 MVA-BN doses under the new HERA framework will be delivered in 2026, adding to existing BARDA orders and supporting the company’s goal of building a DKK 1.5 to 2 billion preparedness revenue base for 2026.
• Topline data from a pediatric trial showed that immune responses to MVA-BN in children aged 2 to 11 were non inferior and in fact 2.5 times higher than in adults, with a comparable safety profile, paving the way for a planned EMA submission in 2026 to expand the vaccine’s label to younger age groups.
• The planned DKK 18.1 billion takeover of Bavarian Nordic by Nordic Capital and Permira, at a best and final offer price of DKK 250 per share, was ultimately cancelled after acceptances reached only 60 percent, below the revised minimum threshold of 66 2/3 percent.

Valuation Changes

• Fair Value: increased from DKK 225 to DKK 250. This reflects a modest upward revision in the long-term valuation.
• Discount Rate: risen slightly from 4.90 percent to about 5.16 percent, implying a marginally higher required return and risk assessment.
• Revenue Growth: downgraded from approximately minus 4.17 percent to around minus 7.01 percent, indicating a more pronounced expected contraction in top line performance.
• Net Profit Margin: reduced from about 14.35 percent to roughly 10.98 percent, signalling expectations for weaker profitability.
• Future P/E: increased significantly from roughly 24.4x to about 36.8x, pointing to a higher valuation multiple despite softer growth and margin assumptions.