Slightly Lowering UCB’s FVE to EUR 97 on Macro Headwinds and Patent Losses; Shares Undervalued

UCB decreased its guidance for 2022, which reflects macroeconomic headwinds leading to upward pressure on costs, the impact from Vimpat’s patent exclusivity loss, and strong generic competition for Keppra in Japan. We’ve updated our model, and we now forecast 2022 revenue of roughly EUR 5.35 billion, reflecting a roughly 7.5% decrease from 2021. Higher costs and continued research and development expenses are dampening adjusted EBITDA margins. Management expects an adjusted EBITDA margin around 21% for 2022, compared with previous guidance of about 26%. We’ve lowered our fair value estimate slightly to EUR 97 per share from EUR 100, reflecting near-term headwinds. We maintain our no-moat and negative trend ratings for UCB and view shares as slightly undervalued.