There, at the end of June, one reads and hears about the "luxury problems" at industry leader Bachem, where, for example, the demand for drugs against obesity is supposedly causing a peptide boom - as already described in detail by us on June 15, 2023 - and at the same time their CEO underlines that things have never been so good with peptides, also with regard to diabetes, cancer and other symptoms. Thanks to the old and new contracts, the business is secured for the next decade, with a significant increase in personnel. It should therefore be more than logical that our favorite, the active ingredient manufacturer POLYPEPTIDE, will also benefit from this development, especially since new contracts (effective from 2024) have also been landed here. Unfortunately, the disastrous share price development speaks a different language - for the time being; after an interim high of over CHF 25 in May, the share is now at an all-time low. This is an opportunity to get in (again) at ridiculous prices!
POLYPEPTIDE will present its figures for 1H23 on August 15. One hears that as of this date, among other things, confidence-building measures will be put on the table. Sales are expected to be on last year's level, whereby it should be noted that the loss of Novavax (sales EUR 33m) could be compensated by other volume and revenue drivers. We are curious to see if this is the case! So far, the new management team (CEO, CFO and COO) has failed to provide any real evidence of a normalization. The situation is aggravated by a new study by Citigroup, according to which the market - and perhaps we too - underestimate the downside risk to growth and margins. Citigroup justifies its skepticism by pointing out that the build-up of oligonucleotides is slow and large orders tend to dilute margins. It will take clear operational bright spots on Aug. 15 for PO-LYPEPTIDE's stock to "start flying again." If the company delivers, we have "bargain prices"! Target price: CHF 37!
