Emergent BioSolutions Inc

Emergent BioSolutions, Inc. (NYSE: EBS) is a life sciences company providing preparedness and response solutions addressing accidental, deliberate and naturally occurring public health threats (PHTs). Its segments include Products Segment and Services Segment.

Recent Financial and Business Updates:

• Recent Business Updates:
  • CEO Transition: The company announced a CEO transition, appointing Haywood Miller as Interim CEO after the retirement of Robert G. Kramer.
  • FDA Approval: The U.S. Food and Drug Administration (FDA) granted approval for CYFENDUS™ (Anthrax Vaccine Adsorbed, Adjuvanted), previously known as AV7909, a two-dose anthrax vaccine for post-exposure prophylaxis, marking an important milestone.
  • Travel Health Business Sale: The company successfully concluded the sale of its travel health business to Bavarian Nordic for total consideration of up to USD 380 million. This includes an upfront payment of USD 270 million. Currently, the company is actively facilitating the transfer of assets, personnel, and programs under a minimum six-month Transition Services Agreement.
  • Credit Facilities Amendment: A significant development involved the amendment and maturity extension of the company's existing senior secured credit facilities, enhancing financial flexibility.
  • Ebanga™ Contract: The company secured a substantial 10-year contract with the Biomedical Advanced Research and Development Authority for advanced development, manufacturing scale-up, and procurement of Ebanga™ (ansuvimab-zykl), a critical treatment for Ebola.
• Product Sales:
  • Net Anthrax MCM: In Q2 2023, revenues from Anthrax Medical Countermeasure (MCM) declined by USD 74.6 million compared to Q2 2022. This decrease was primarily attributable to the timing of sales related to CYFENDUS and BioThrax, partially offset by increased sales of Anthrasil.
  • NARCAN: Q2 2023 witnessed a notable increase of USD 32.3 million in revenues from NARCAN® (naloxone HCl) Nasal Spray compared to Q2 2022. This surge was driven by higher branded NARCAN sales to U.S. public interest channels and increased Canadian retail sales. However, it was partially offset by reduced commercial retail sales in the U.S. following the termination of the Company's relationship with Sandoz.
  • Smallpox MCM: Revenues from Smallpox MCM in Q2 2023 surged by USD 107.9 million compared to Q2 2022. This substantial increase was primarily due to the exercise and full delivery of a USD 120 million option by the U.S. government to purchase ACAM2000. However, it was partially offset by lower VIG sales due to timing.
  • Other Products: In Q2 2023, revenues from other product sales decreased by USD 0.6 million compared to Q2 2022. This decline was primarily due to lower BAT sales, although it was partially offset by higher RSDL sales.
• CDMO Services: Revenues from contract development and manufacturing services exhibited significant growth of USD 23.7 million in Q2 2023 compared to Q2 2022. This increase stemmed from activities at the company's Canton facility for a CDMO customer and the resolution of a customer's outstanding obligation.
• CDMO Leases: Revenues from contract development and manufacturing leases also increased by USD 7.2 million in Q2 2023 compared to Q2 2022. This lease revenue in the current year quarter is related to the company's Canton facility, demonstrating positive performance.
• Contracts and Grants: In Q2 2023, revenues from contracts and grants experienced a decrease of USD 0.7 million compared to Q2 2022, reflecting specific operational dynamics.
• Equity Offering Program: During Q2 2023, the company initiated its "at-the-market" equity offering program (ATM Program). In this period, the company successfully sold 1.1 million shares of its common stock under the ATM Program, generating gross proceeds of USD 9.1 million, with an average price of USD 8.22 per share, contributing to its financial strategy.
• Product Gross Margin: For the three months ended June 30, 2023, Product gross margin and Product adjusted gross margin witnessed a notable increase of USD 21.1 million and USD 22.1 million, respectively, compared to the same period in 2022. However, the Product gross margin percentage decreased by 7 percentage points to 55% for the three months ended June 30, 2023. This decrease primarily resulted from increased shutdown-related costs and inventory write-offs, signifying evolving cost dynamics.

Technical Observation (on the daily chart)

Presently, the stock has corrected by approximately 85.21% since reaching its highest point in the past 52 weeks, which occurred on September 30, 2022. The Relative Strength Index (RSI) over a 14-day period stands at 28.62 currently in the oversold zone, indicating a state of potential consolidation or a short-term upward momentum. This upward momentum might take the stock closer to a significant resistance level at USD 4.00-USD 4.50. Additionally, the stock's current positioning is below both the 21-day Simple Moving Average (SMA) and the 50-day SMA, which may serve as dynamic short-term resistance levels.  

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given to Emergent BioSolutions, Inc. (NYSE: EBS) at the current market price of USD 3.21 as of September 28, 2023, at 09;30 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is September 28, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

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