October 18th, 2021 | 10:44 CEST
BioNTech, Cardiol Therapeutics, Bayer: Where triple-digit returns beckon
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At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.
BioNTech: Why investors should tick off 2020
The shares of vaccine pioneer BioNTech have had a turbulent few months. In the summer, the share price almost doubled within a few weeks but then gradually fell. On a three-month horizon, the stock is nevertheless up around 20%. However, in terms of price performance, the whole thing looks like a zero-sum game - the price fluctuations were too significant. Such volatility always harbors the risk that market participants will be caught on the wrong foot. Those who entered the market at EUR 300 thought they were successful bargain hunters only for a short time - after all, the share price fell by another third shortly afterward. How should investors deal with BioNTech now?
Given the continued need for booster vaccinations and the associated cash flows, BioNTech should continue to do good business with the pandemic in the future. However, the market is already looking further ahead. The Company would do well to bring more innovative products based on mRNA technology to market soon. But BioNTech will not be able to move as quickly as it did in the pandemic year 2020. At that time, the support of the US government, among other things, ensured that vaccine manufacturers were able to research and develop in the dark without regard to the costs. BioNTech now lacks this tailwind. While the Company continues to benefit from sales of its Corona vaccine, which is an advantage over other biotech stocks, investors should be prepared that new developments in the biotech sector are long and complex. Disappointment is, therefore, not out of the question for BioNTech. That is a risk given the stock's drop rate.
Cardiol Therapeutics: Is history repeating itself?
While BioNTech is valued at around EUR 50 billion, Cardiol Therapeutics is valued at only around EUR 145 million. The Company is researching active ingredients based on cannabidiol for the therapy of inflammatory heart diseases. Positive correlations between the active ingredient and the alleviation of inflammation in the heart have been scientifically proven, and Cardiol Therapeutics is in clinical trials in this regard.
Cardiol expanded its studies to include Covid-19 patients, testing its compounds under new conditions in the wake of the pandemic. So for the biotech company's research progress, the pandemic was a kind of catalyst. Cardiol Therapeutics has been listed on the US tech exchange Nasdaq for several months now and is thus in the focus of international investors. CEO David Elsley presented at the International Investment Forum (IIF) last week, again emphasizing the attention his Company has received due to its Nasdaq listing. The share of Cardiol Therapeutics has been volatile over the past few weeks but continues to show strong upward momentum. Historical examples, such as GW Pharma, show that the Nasdaq offers excellent potential for companies like Cardiol. Within a very short listing time on Nasdaq, GW Pharma's market capitalization rose from about USD 100 million to more than USD 1 billion. It was acquired by Jazz Pharmaceuticals a few months ago for more than USD 7 billion.
Bayer is doing well
While stocks like Cardiol Therapeutics have great momentum, making them more for speculative investors, Bayer scores on other merits: The share is valued low, and Bayer has some hot irons in the fire with its pharmaceuticals and seeds businesses. The Rhinelanders see great potential in cell and genetic engineering and have intensified research in this area. Bayer has also been successful in developing seeds. A new type of corn that requires little water and is ideally suited to climate change is also paying dividends for Bayer's image as a possible inflation beneficiary. At around 3.5%, the dividend yield is respectable. However, Bayer will not be a high-flyer any time soon. But the stock is certainly solid.
While it is not clear where a fair valuation lies for BioNTech, given the many laudations in recent months, Bayer should continue to score with steady development in the coming months and years. Cardiol Therapeutics, on the other hand, offers the chance for a complete revaluation. If the clinical trials are successful and Cardiol's active ingredient can establish itself, the current valuations should be a thing of the past. However, investors should keep in mind that the flip side of every opportunity is risk.
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