Evotec slashed, Bayer sued, and Cardiol Therapeutics share praised

Cardiol Therapeutics: Analysts see significant upside potential

Cardiol Therapeutics is one of the biotech success stories of the current year, and according to analysts, there is still significant upside potential. After the share rose to EUR 2.80 by early June, tripling in value within five months, convincing study results of all things were taken as an opportunity for consolidation. In recent weeks, a bottom has been formed around the EUR 2 mark. At this level, the Canadian cardiovascular disease specialist is valued at USD 150 million. Far too low, according to three different analyst firms.

Recently, experts from Canaccord Genuity confirmed their "Buy" recommendation for Cardiol shares with a price target of USD 8. The reported positive topline data for the Phase II open-label US pilot study of Cardiol's leading drug candidate, CardiolRx™, for the treatment of recurrent pericarditis (inflammation of the pericardium) had not been sufficiently recognised by the market. The results were superior to the comparable and already approved competitor drug, rilonacept. According to the American Heart Association, recurrent pericarditis occurs in 15 to 50% of people with pericarditis in the US, which amounts to around 40,000 people. Currently, treatments mainly consist of high-dose anti-inflammatory therapies such as aspirin or corticosteroids. These treatments can take years, and the side effects can lead to a dependency on painkillers.

The analysts believe that CardiolRx™, if approved, will have clear advantages over current treatments. Oral administration is also an advantage that patients and doctors will appreciate. The experts see a revenue potential of up to USD 118 million annually in the US alone. And it is not only Canaccord analysts who consider Cardiol shares to be undervalued. After the study data, First Berlin raised its price target from USD 3.60 to USD 8.50. The analysts at H.C. Wainwright see the fair value even higher at USD 9.

Bayer: Another lawsuit and penalty payment

While Cardiol shares are poised for another surge, Bayer is once again making headlines with lawsuits. This time, it is not just about the billion-dollar Glyphosate flop. Most recently, antitrust proceedings were opened in the US state of California for collusion over a tick and flea repellent for animals. In the coming months, the federal court in San Jose will be hearing whether Bayer, together with distributors, hindered competition through prohibited discounts. The plaintiff is the pharmaceutical company Tevra.

Bayer must once again pay millions for the decades-old banned chemical PCB. In the US state of Washington, a court has ordered the Leverkusen-based company to pay USD 160 million. PCBs have led to the pollution of wastewater and rivers. Like the Glyphosate problem, Bayer's PCB problems were also inherited by the acquisition of Monsanto.

Evotec: Price target slashed

After Evotec's share price plummeted in the first few months of the year, many had hoped for a quick recovery. After all, the problems lay with the management rather than the operating business. However, there is still no sign of a turnaround. Investors currently have to live with a bottoming out between EUR 9 and EUR 10. The analysts at Morgan Stanley do not see much more upside potential either. The experts at the major US investment bank have slashed the price target from EUR 28 to EUR 12. Accordingly, the rating has been adjusted from "Overweight" to "Equal-weight". The adjustment of the biotech company's business model makes sense. However, it is not yet foreseeable how this will affect Evotec's revenue and earnings situation.

Bayer simply cannot seem to get out of the mire of lawsuits. There are also no real price drivers in the operating business. In contrast, buying Cardiol shares currently seems promising. Analysts are convinced that the current share price is significantly below the fair value. Disillusionment is spreading at Evotec. The first step is to sustainably exceed the EUR 10 mark.