Under Pressure Biontech (BNTX.US)

German company Biontech (BNTX.US) was developing an MRNA vaccine in collaboration with US giant Pfizer and was one of the biggest beneficiaries of the coronavirus pandemic. However, pharmaceutical stocks are now in retreat as the pandemic slowly subsides:

  • The company has advertised their vaccines as outperforming the competition in terms of efficacy while causing minimal interference to those vaccinated thanks to new technology;
  • The company’s stock rose from $30 in March 2020 to nearly $400 in the summer of 2021, a nearly 1000% increase;
  • At its peak, the company was registering a nearly 77%, record net profit margin. Net profit for 2021 was $10.2 billion which was a massive increase from the $15.2 million net profit in 2020. Pfizer and Biontech are estimated to have earned more than $37 billion net from vaccine sales;
  • Investors quickly began to price in the slowdown in revenue growth and lowered their forecasts for continued growth which resulted in a decline in the valuation of Biontech and the other vaccine companies; 
  • mRNA technology is moving beyond the coronavirus pandemic and, along with CRISPR, could be one of the key trends in modern medicine in the coming years. The mRNA market is very narrow-  Biontech and Moderna are the top companies from the Western world, however they are facing growing competition from Chinese Zheinjang, which has recently doubled its production capacity;
  • On April 26, Biontech with Pfizer filed an application in the U.S. to allow a booster dose for children between the ages of 5 and 11, and they plan to file the same application in the EU. Although the vaccine market has not disappeared and Biontech continues to produce and sell, investors now expect a significant decline in revenue which has negatively impacted stock price; 
  • The company has proven strong manufacturing and logistical capabilities which helped containing the spread of pandemic on a global scale, and future collaboration with Pfizer may help to broaden the distribution of mRNA technology, that is becoming better understood by scientists;
  • Pharmaceutical stocks are now under pressure as the pandemic, which was seen as the main risk factor in the last two years, is now giving way to inflation concerns, monetary tightening, the war in Ukraine and rising commodity prices.

Biontech will report Q1 2022 financial results on May 9.

Biontech (BNTX.US), D1 interval. The company’s shares have been in an uptrend since March 2020 and despite sharp declines in recent months the primary trendline remains intact. The stock has lost more than 60% of its valuation since the summer 2021 price highs. A price drop below $120, which coincides with the 78.6 Fibonacci retracement, the price reaction from the fall of 2020 when Biontech’s vaccine was approved, could signal a deepening sell-off and buyers capitulation. It is worth noting that declines in this area have already been halted once on the day of Russia’s invasion of Ukraine. On the other hand, a potential break above $195, where the 61.8 Fibonacci retracement is located, could restore positive sentiment towards Biontech stock. Source: xStation5

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