BioNTech Reports Strong Vaccine Revenue, Flu Prospects

We've raised our fair value estimate for BioNTech BNTX to $139 per share from $124 following first-quarter results, as we've raised our COVID-19 vaccine revenue projections slightly for the year and added potential revenue for an mRNA-based influenza vaccine beginning in 2024, but also raised our tax rate assumptions for the firm. BioNTech reported roughly EUR 2 billion in revenue, including more than EUR 1.7 billion for its share of gross profit from Pfizer as well as sales milestones, and EUR 200 million in direct sales of the vaccine in BioNTech's territories (Germany, Turkey). BioNTech expects EUR 12.4 billion in COVID-19 vaccine revenue based on signed contracts for 1.8 billion doses (including direct sales in BioNTech territories and Pfizer sales), and we've raised our total revenue forecast for 2021 (previously EUR 11.6 billion) to match this estimate. With additional contracts signed and the prospect of use in adolescents (this summer) and younger children (this fall), we assume nearly $29 billion in global 2021 sales of the vaccine. In addition, we now assume a 60% probability of approval of a Pfizer/BioNTech mRNA-based flu vaccine entering the market in 2024, with potential peak sales of $2.5 billion-$3 billion, in line with our assumptions for Moderna's program (both are entering development this year). However, we've also significantly raised our estimated tax rate for BioNTech closer to the German rate of 31%, which counters some of the positive impact on our valuation. We see the shares as overvalued at recent prices, but our bull-case scenario implies that shares are trading at a 20% discount to their intrinsic value. Assumptions on the longevity of COVID-19 vaccine revenue are key to this difference, but we're not ready to assume broad annual coronavirus vaccination globally in the long run. Although we don't think BioNTech has yet established an economic moat, validation of its technology and a growing pipeline support a positive moat trend.

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