Swedish Orphan Biovitrum (SOBI.ST) breakout from consolidation

23 thg 1, 2018

Sanofi's bid yesterday for SOBI's partner Bioverativ at a 60%+ premium is highly supportive for SOBI's valuation. Strong future in haemophilia products Eloctate and Alprolix. As the European territory (SOBI territory) launches were two years later than the US, SOBI's sales are at an earlier stage, and there is strong growth potential as the products move closer to market share achieved in the US. Bioverativ was acquired at 26x 2018 EPS and SOBI currently trades at 15x 2018 EPS. Leading analysts expect SOBI to earn SEK 8,69 per share in 2018 and SEK 11,40 per share in 2019. Thus, we are currently at 12x 2019 EPS for a company that will exceed USD 1 billion in sales this year and grows top line at >20% per annum. A reasonable 12 month target would be industry average 22x 2019 EPS, or SEK 250, roughly double todays share price. The stock has been consolidating for some time, and yesterday broke out on record volume, forming a "cup completion cheat" in Mark Minervini's terms. That is a breakout from a cup and handle formation, where the handle formed in the lower third of the cup.