POLYPEPTIDE: Can we achieve the +40%?

The share of the active ingredient manufacturer POLYPEPTIDE has had a sensational performance in the recent past. Our additional purchase at CHF 16 (on 12.01.2024) resulted in a high +89.4% compared to last Thursday's closing price (CHF 30.30)! What next? If we add our initial purchase at CHF 27 (on 30.01.2023), a sale at CHF 30 would result in a total performance of around +40%; our price target was or is CHF 27. We want to take advantage of the "favor of the hour" and sell the position, which is why we have set a sell limit at CHF 27; if the euphoria continues a little longer, the chance remains intact that we can achieve more at the opening today (Thursday). We are fundamentally convinced by the company, but in the short term (6 to 12 months) there are two reasons for taking profits: Firstly, we see a noticeable amount of "short covering" in the current price rise - even though the share was definitely massively oversold - i.e. the many shorties have to cover their short sales, which leads to strong price advances when volume tends to "dry up". Secondly, the outlook for 2024 is not yet "rejoicing"; profit estimates have been reduced, although better cost absorption should bring the margin back into positive territory; ZKB is forecasting 9.6%. The ramp-up of the new large-scale plant in Belgium is of some relevance for the time being. The major orders will certainly drive growth significantly, but only later (from 2025 & onwards) than we expect. It can therefore not be completely ruled out that we could again see lower share prices in the CHF 20 range. If this forecast comes true, we will buy the share again. However, you can also remain invested with a longer-term view, as the CHF 30 mark is unlikely to be the end of the line. For the time being, however, we prefer the "pig in a poke" and then the temporary "sideline"!

POLYPEPTIDE N is listed on the SIX Swiss Exchange under the symbol PPGN, the security number is 111'076'085, last price approx. CHF 30.30.