Last Update 17 Dec 25

Fair value Decreased 16%

ALVO: Resolution Of FDA Inspection Issues Will Unlock Biosimilar Launch Upside

Analysts have reduced their average price target for Alvotech from about $26.40 to roughly $22.17 per share, citing FDA inspection related uncertainties around key biosimilar launches, as well as a series of recent target cuts and rating downgrades, as justification for a lower, though still constructive, valuation framework.

Analyst Commentary

Recent Street research reflects a more cautious stance on Alvotech, with several firms cutting price targets and one moving to the sidelines following regulatory setbacks tied to the company’s biosimilar pipeline.

While the headline numbers point to reduced upside, analysts remain divided on the balance between near term execution risk and longer term growth potential once manufacturing issues are resolved.

Bullish Takeaways

Bullish analysts continue to see upside from Alvotech’s diversified biosimilar portfolio, arguing that the current price targets already bake in a meaningful discount for regulatory and execution risk.
The decision to maintain Buy ratings despite lower targets signals confidence that remediation at the Reykjavik facility can restore the launch timeline and unlock deferred revenue and margin expansion.
Supportive commentary highlights that a successful resolution of the complete response letters could act as a catalyst for multiple product launches, improving visibility on long term earnings growth.
Some bullish views frame the pullback as an opportunity for investors willing to tolerate near term volatility in exchange for exposure to a scaled biosimilar platform with global partnerships.

Bearish Takeaways

Bearish analysts emphasize that FDA identified deficiencies at the Reykjavik manufacturing site introduce uncertainty around the timing of AVT05, AVT03, and AVT06 launches, increasing execution risk.
The shift from Buy to Hold by more cautious voices reflects concern that regulatory overhangs could persist longer than expected, pressuring valuation multiples and limiting near term share price recovery.
Lowered price targets, in some cases by a substantial margin, highlight reduced confidence in the pace at which Alvotech can translate its pipeline into sustainable cash flow and returns on invested capital.
There is also growing worry that further delays or additional regulatory findings could force management to reallocate capital or adjust its commercial rollout strategy, weighing on growth forecasts.

What's in the News

Deutsche Bank downgraded Alvotech to Hold from Buy and cut its price target to $8 after an FDA complete response letter for AVT05 cited deficiencies at the Reykjavik manufacturing facility, raising the risk of similar setbacks for AVT03 and AVT06 (Periodicals, FDA CRL).
The FDA complete response letter for AVT05, Alvotech's proposed biosimilar to Simponi in prefilled syringe and autoinjector forms, requires resolution of manufacturing deficiencies and prompted the company to lower its 2025 revenue and EBITDA outlook (Key Developments, FDA CRL).
The European Commission approved AVT03, Alvotech's biosimilar to Prolia and Xgeva, opening access to a European denosumab market valued at about $1.2 billion, with commercialization led by partners STADA and Dr. Reddy's (Key Developments, EC approval).
Alvotech and Advanz Pharma received European Commission and UK MHRA approvals for Gobivaz, a biosimilar to Simponi, across multiple indications and presentations, expanding Alvotech's autoimmune footprint in the EEA and UK (Key Developments, EC and MHRA approvals).
A UK High Court ruling rejected Regeneron and Bayer's injunction request related to manufacturing of AVT06, allowing Alvotech and its CMO to continue stockpiling its Eylea biosimilar in the UK ahead of SPC expiry in November 2025 and supporting broader launch plans (Key Developments, legal ruling).

Valuation Changes

Consensus Analyst Price Target: reduced from about $26.40 to roughly $22.17 per share, implying a moderate downward reset in fair value expectations.
Discount Rate: edged down slightly from approximately 8.02 percent to 7.86 percent, reflecting a modestly lower perceived risk profile or cost of capital.
Revenue Growth: trimmed marginally from about 32.57 percent to 31.93 percent, signaling slightly more conservative top line growth assumptions.
Net Profit Margin: increased modestly from roughly 24.12 percent to 24.47 percent, indicating a small improvement in expected long term profitability.
Future P/E: lowered meaningfully from around 30.37x to 25.38x, pointing to a notable compression in the multiple applied to Alvotech’s forward earnings.

Accelerating global biosimilar adoption and strategic partnerships expand Alvotech's market reach, boosting future revenue stability and margin potential.
Vertical integration and acquisitions improve operational efficiency and resilience, supporting sustainable earnings growth amid industry-wide cost pressures.
Reliance on unpredictable milestone payments, intense price competition, high fixed costs, heavy partner concentration, and regulatory risks threaten revenue stability, margin health, and long-term profitability.

Catalysts

About Alvotech

Through its subsidiaries, develops and manufactures biosimilar medicines for patients worldwide.What are the underlying business or industry changes driving this perspective?

Alvotech's expanding global rollout and market share gains for its leading biosimilars, especially Humira and STELARA, signal continued growth as payers worldwide accelerate the shift to biosimilars-directly supporting future revenue and cash flow growth.
Ongoing launch and approval pipeline activity, including upcoming regulatory decisions in major global markets (for AVT03, AVT05, AVT23, and others), positions the company to tap into blockbuster biologic markets coming off-patent, potentially driving a step-change in topline revenue once approvals are secured.
Strengthened strategic partnerships (e.g., Advanz Pharma, Teva, Dr. Reddy's) and expanding distribution footprint enable Alvotech to rapidly access new regions and patient pools as governments seek more cost-effective treatment options, likely enhancing future revenue predictability and operating margins.
Investments in vertical integration and acquisitions (Xbrane R&D, Ivers-Lee) improve operational control and cost efficiencies, expected to enhance gross margin resilience and support sustainable earnings growth amid industry-wide margin pressures.
Sustained global trends of aging populations and rising chronic diseases are structurally increasing demand for biologic therapies, expanding the biosimilar addressable market and underpinning long-term revenue visibility and upside for Alvotech.

Alvotech Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Alvotech's revenue will grow by 36.7% annually over the next 3 years.
Analysts assume that profit margins will increase from 11.3% today to 37.5% in 3 years time.
Analysts expect earnings to reach $538.9 million (and earnings per share of $1.47) by about September 2028, up from $63.4 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.2x on those 2028 earnings, down from 39.3x today. This future PE is lower than the current PE for the US Biotechs industry at 15.5x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.02%, as per the Simply Wall St company report.

Alvotech Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Alvotech's guidance and revenue recognition are highly dependent on milestone payments tied to regulatory approvals, which are described as "lumpy" and unpredictable-delays in product approvals or shifts in regulatory timelines (such as FDA inspections or BsUFA date movements) could cause significant shortfalls in revenue, impacting both top-line and earnings volatility in the long term.
The biosimilar industry, especially in products like Humira and STELARA, faces intensifying price competition, with management highlighting "very competitive" pricing and unsustainably low offers from rivals-this pressure could lead to deteriorating net margins and erode profitability over the long term, especially as payer cost-containment becomes more aggressive globally.
Heavily increased R&D investment and recent acquisitions (e.g., Xbrane R&D and Ivers-Lee) add to Alvotech's fixed cost base at a time when cash flow, while improved, is still overshadowed by a high debt load ($1,139 million in debt versus $151 million in cash); if future launches or approvals are delayed or underperform, this could threaten liquidity, force dilutive equity issuance, or increase leverage, directly impacting shareholder value.
Alvotech's dependency on a small number of commercialization partners like Teva, Quallent and STADA for market access in key geographies introduces concentration risk-any unfavorable renegotiation, contract termination, or underperformance by these partners could lead to sudden revenue and market share declines, increasing volatility and reducing earnings visibility.
Regulatory scrutiny-particularly increased FDA and global inspections, or shifting standards for biosimilar approvals-remains a material risk; even "ordinary course" delays or raised quality hurdles could slow time-to-market for pipeline assets, limiting revenue growth and risking further lumpiness or outright misses on financial targets.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $17.5 for Alvotech based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $28.0, and the most bearish reporting a price target of just $14.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.4 billion, earnings will come to $538.9 million, and it would be trading on a PE ratio of 15.2x, assuming you use a discount rate of 7.0%.
Given the current share price of $7.95, the analyst price target of $17.5 is 54.6% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

ALVO: Facility Improvements Will Drive Recovery Despite Recent Regulatory Setbacks