This article is an excerpt from “Barron’s 10 Favorite Stocks for 2024,” published on Dec. 15, 2023. To see the full list, click here.
BioNTech,
like all Covid-19 vaccine makers, has gotten crunched in 2023. But it has so much cash that it would have appealed to Warren Buffett’s mentor, famed value manager Benjamin Graham.
Covid vaccine plays, including BioNTech, its partner Pfizer, and competitor Moderna, have slumped amid growing doubts about demand for the jabs. Those concerns were confirmed this past week after
Pfizer
cut its guidance for Covid-related sales. BioNTech stock is now trading around $104, down from a peak of $447 in 2021.
The bear case is that profits from Covid vaccines, BioNTech’s only commercial product, will flag in 2024 and that the company’s drug pipeline is unexciting. Citing these factors, J.P. Morgan recently cut its rating on the stock to Underweight.
But unlike so many cash-burning biotechs, BioNTech is expected to remain profitable in 2024, and the company’s oncology-focused pipeline could prove more promising than some investors believe. BioNTech has also said it won’t blow the cash on an expensive deal.
And BioNTech has oodles of cash, more than $18 billion. That’s nearly three-quarters of its current market value of $25 billion. Investors effectively are paying just $7 billion for its Covid franchise and drug pipeline.
Graham would call that a margin of safety. We call that a stock worth owning.
Write to Andrew Bary at [email protected]
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