Falling Vaccine Demand And Looming Regulatory Risks Will Crush Value

Key Takeaways

• Decreasing vaccine demand, stricter regulations, and patent expirations threaten long-term revenue and profitability across BioNTech's main franchises.
  
• High R&D spending on oncology and strong competition could increase costs, reduce pricing power, and limit future earnings growth.
  
• Strategic pipeline progress, global partnerships, and diversification beyond COVID-19 vaccines position BioNTech for sustainable, long-term growth and reduced reliance on pandemic revenues.

Catalysts

A biotechnology company, develops and commercializes immunotherapies to treat cancer and infectious diseases in Germany.

• Falling COVID-19 vaccine demand in core markets, including ongoing declines in U.S. vaccination rates and increased vaccine hesitancy globally, is expected to materially reduce long-term revenue from BioNTech's main commercial franchise as public adoption rates stagnate or deteriorate further.
  
• Ramped regulatory scrutiny and shifting public policy frameworks internationally could lead to product launch delays, higher compliance costs, and increased risk of inventory write-downs across both the COVID-19 and oncology portfolios, ultimately compressing net margins and eroding future earnings growth.
  
• BioNTech's heavy near-term investment in late-stage oncology trials, together with the risk of failed or delayed outcomes especially in its pivotal BNT327 and mRNA cancer immunotherapy programs, threatens to increase future R&D expenses while delaying or limiting meaningful new revenue streams, placing significant pressure on profitability.
  
• Intensifying competition from larger pharmaceutical manufacturers and other mRNA-focused biotechs-many with more established commercial infrastructure-raises the likelihood that BioNTech will lose pricing power and market share even if products are approved, putting further downward pressure on operating margins and net income.
  
• The expiration of key vaccine and drug patents combined with escalating biosimilar development, alongside global efforts by governments and payers to pursue aggressive price controls, will likely contribute to long-term revenue erosion for BioNTech's pipeline and approved assets, limiting sustainable earnings growth over time.

BioNTech Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on BioNTech compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming BioNTech's revenue will decrease by 18.2% annually over the next 3 years.
• The bearish analysts are not forecasting that BioNTech will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate BioNTech's profit margin will increase from -12.0% to the average US Biotechs industry of 14.2% in 3 years.
• If BioNTech's profit margin were to converge on the industry average, you could expect earnings to reach €223.1 million (and earnings per share of €0.92) by about September 2028, up from €-344.8 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 113.6x on those 2028 earnings, up from -60.1x today. This future PE is greater than the current PE for the US Biotechs industry at 15.3x.
• Analysts expect the number of shares outstanding to grow by 0.27% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.45%, as per the Simply Wall St company report.

BioNTech Future Earnings Per Share Growth

Risks

• BioNTech's robust late-stage oncology pipeline-including BNT327, multiple mRNA cancer immunotherapies (FixVac and iNeST), and a strategic shift toward becoming a multiproduct oncology company-positions it for significant revenue growth if clinical trial results remain positive and regulatory approvals are secured.
  
• The landmark global partnership with Bristol-Myers Squibb will bring in an upfront cash payment of $1.5 billion, $2 billion in noncontingent milestone payments by 2028, and up to $7.6 billion in future development, regulatory, and commercial milestones, with an ongoing 50-50 profit share, all of which could greatly bolster both revenue and net margins over the long term.
  
• Strategic acquisitions and collaborations, such as the pending CureVac acquisition and expanded partnerships with Pfizer and the UK government, are strengthening BioNTech's mRNA platform and broadening its exposure to innovative vaccines and immunotherapies, creating new and resilient revenue streams while reducing reliance on the post-pandemic COVID-19 vaccine market.
  
• Significant cash reserves of €16 billion combined with disciplined spending, cost reductions in non-priority areas, and revenue diversification into pandemic preparedness and service agreements position BioNTech to navigate industry shifts, absorb pipeline investments, and potentially return to net profitability as oncology products reach commercialization.
  
• Emerging positive clinical data across several cancer indications, broad geographic reach, and a move toward a fully integrated biopharmaceutical model enhance BioNTech's ability to capture large addressable markets, drive meaningful long-term revenue growth, and expand margins as more therapies are commercialized and scale efficiencies increase.

Valuation

• The assumed bearish price target for BioNTech is $101.78, which represents two standard deviations below the consensus price target of $135.85. This valuation is based on what can be assumed as the expectations of BioNTech's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $173.04, and the most bearish reporting a price target of just $99.66.
  
• In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be €1.6 billion, earnings will come to €223.1 million, and it would be trading on a PE ratio of 113.6x, assuming you use a discount rate of 6.4%.
  
• Given the current share price of $101.0, the bearish analyst price target of $101.78 is 0.8% higher. The relatively low difference between the current share price and the analyst bearish price target indicates that the bearish analysts believe on average, the company is fairly priced.
  
• 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.