[Click eStock] "SK Bioscience Earnings Forecast Missed... Target Price Down"

[Asia Economy Reporter Myung-Hwan Lee] Hana Financial Investment announced on the 6th that it expects SK Bioscience to report earnings lower than market expectations and has lowered its target stock price from 290,000 KRW to 180,000 KRW. However, the investment rating was maintained as a buy.

Hana Financial Investment's analysis indicates that SK Bioscience's earnings will fall short of market expectations. The company’s forecast for SK Bioscience’s consolidated sales in the first quarter of this year is 88.9 billion KRW, a 21.1% decrease compared to the same period last year, and operating profit is expected to be 27.7 billion KRW, down 48.4% year-on-year. These figures are significantly lower than the initial market estimates of 198 billion KRW in sales and 105.8 billion KRW in operating profit.

The main reason is attributed to delays in outsourced quality assurance (QA) for contract manufacturing organization (CMO) volumes from the U.S. company Novavax, which began in the fourth quarter of last year and continued into the first quarter of this year. The CMO segment sales are estimated at 60.8 billion KRW, and the Novavax licensed vaccine, reflecting the supply of 2 million doses of finished pharmaceutical products (DP), is expected to record sales of 11 billion KRW.

However, growth in the vaccine sector is anticipated. Hana Financial Investment noted that patient enrollment for the Phase 3 clinical trial of SK Bioscience’s COVID-19 recombinant protein vaccine 'GBP510' was completed in mid-January. They expect interim results to be confirmed by April and anticipate approval within the first half of the year. The Phase 1/2 clinical trials for the third additional dose (booster shot) of GBP510 and the investigator-initiated Phase 1/2 trials for heterologous boosters are expected to be completed within the year. Additionally, preclinical results and clinical trial initiation for the Omicron variant vaccine currently under development are also expected within the first half of the year.

Researcher Jaekyung Park of Hana Financial Investment analyzed, "In the long term, re-rating is possible depending on the outcomes of the company’s post-COVID growth strategies, including glocalization, viral vector contract development and manufacturing organization (CDMO), and messenger RNA (mRNA) vaccine platforms."