September 11th, 2024 | 07:00 CEST
Multiplication and travel boom! Bayer, TUI, Vidac Pharma
Vidac Pharma shares have gained over 23% in the past four weeks. Driven by strong study data from the biotech company focused on fighting cancer, analysts even see the potential for multiplication. Such euphoria has been absent at Bayer for some time. However, at least there is positive momentum from the pharmaceuticals division again, which is much needed, as the Leverkusen-based company's pipeline is considered modest. In contrast, business at TUI is booming. Nevertheless, the tourism group's shares have disappointed in the current year. Will a new cruise ship take it towards EUR 10?
time to read: 4 minutes
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Author:
Fabian Lorenz
ISIN:
BAYER AG NA O.N. | DE000BAY0017 , TUI AG NA O.N. | DE000TUAG505 , VIDAC PHARMA HOLDING PLC | GB00BM9XQ619
Table of contents:
Author
Fabian Lorenz
For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.
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Vidac Pharma: Cancer drug with billion-dollar potential
Vidac Pharma's vision sounds groundbreaking - and it likely is: a technology that corrects a common feature of all cancer cells is set to revolutionize the way cancer is treated. The biotech firm is researching how to reverse the abnormal metabolism of cancer cells, which could stop their proliferation. Vidac has reached significant milestones on this path in recent months, and the share has finally taken off. Even after the share price increase of over 20% in the past four weeks, analysts at Germany's Sphene Capital believe that Vidac's share price has the potential to multiply significantly.
Vidac Pharma recently published promising results of preclinical studies with the active substance VDA-1275. The drug, which was developed as a systemic drug for the treatment of solid tumors, showed significant efficacy as a monotherapy. The drug was also convincing in combination with two standard cancer therapies and triggered an immunological response.
Subsequently, the analysts reiterated their "Buy" recommendation based on a three-stage discounted cash flow entity model with a price target of EUR 4.90 in the base case scenario. The Vidac share is currently trading at EUR 0.26. A prerequisite for the multiplication is that Vidac Pharma receives approval for its current core product VDA-1102-AK. The advanced drug candidate is intended to combat mycosis fungoides - a cancer of the white blood cells known as lymphocytes. VDA-1102 is already in clinical Phase 2a. Following the publication of positive interim results based on 50% of subjects, final results are expected to be published by the end of the year. If approval is granted, Vidac could generate cumulative revenue of over EUR 1 billion within a few years and achieve an EBIT margin of over 50%. To put this into perspective: Vidac Pharma is currently valued at less than EUR 15 million. The complete Sphene study is available for download here.
Bayer: EMA brings joy
Given Vidac Pharma's advanced drug candidate VDA-1102 and its low market capitalization, the Company could also be a takeover target for Bayer. The Leverkusen-based company urgently needs to strengthen its pharmaceutical pipeline, as revenue declines are expected in the coming years for some of its blockbuster drugs. It is, therefore, good news that Bayer was able to report an approval extension for the blockbuster Eylea at the beginning of the week. The European Medicines Agency (EMA) has granted Bayer permission to administer the ophthalmology drug, the Company's second best-selling product, in a new dosage.
Christine Roth, EVP, Global Product Strategy and Commercialization and member of Bayer's Pharmaceuticals Leadership Team: "OcuClick offers doctors excellent control, precision, and simplicity in the administration of Eylea 8 mg. This innovative syringe developed specifically for ophthalmology, in combination with Eylea 8 mg solution for injection, which is approved for extended treatment intervals of up to five months in appropriate patients, demonstrates how our innovation directly benefits patients."
Despite the announcement, UBS maintained its "Neutral" rating yesterday for Bayer shares with a target price of EUR 30. In their update, the analysts focused on the DAX-listed company's Chemicals division. Although there are signs of an upward trend in the sector, the negative developments in the automotive sector are creating risks.
TUI: Towards EUR 10 with a new cruise ship?
Similar concerns exist about a possible cooling of demand at TUI. So far, however, the weak economy - particularly in Germany - has not had any impact on the willingness to travel and, therefore, not on TUI's booming business. Both the Company's hotels and cruise ships are expected to celebrate record occupancy rates this year.
Having already increased its hotel contingents, the Company is now also increasing its cruise ship capacity. TUI Cruises is building a new ocean liner, the "Mein Schiff Relax". **With 18 decks for around 4,000 passengers, it is set to become the largest ship in the TUI fleet. The "Mein Schiff Relax" is due to welcome its first guests for a voyage through the Mediterranean as early as March next year. Another cruise ship is then due to be launched in 2026. It would then be the ninth ship in the TUI fleet.
While business is booming, the TUI share has lost ground in the current year and is trading just below the EUR 6 mark. While most analysts are unable to decide on either a buy or a sell recommendation, only Deutsche Bank is currently advising investors to "Buy". The analysts see the fair value of the TUI share at EUR 10.50, indicating more than 50% upside potential.
If the enthusiasm for travel continues, the TUI share should finally take off. The Company has managed to get its financial difficulties under control this year. Vidac is on track to unlock billion-dollar potential. If VDA-1102 is also convincing in clinical Phase 2a trials, the share will likely face a revaluation and perhaps a takeover by Big Pharma. As for Bayer, is not an obvious buy. The legal disputes continue to weigh too heavily, and it lacks the financial resources to significantly strengthen its pharmaceutical pipeline.
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