Two analysts have raised their target prices for Pharmaniaga Bhd citing earnings growth after the pharmaceutical manufacturer had been tipped to be a frontrunner to secure the government’s contract to repackage and distribute Covid-19 vaccines.
MIDF Amanah Investment Bank analyst Noor Athila Mohd Razali revised her TP to RM4.74 from RM3.16 while Kenanga Investment Bank analyst Raymond Choo Ping Khoon raised his TP to RM1.80 from RM1.35.
Noor Athila said that her higher TP was derived through “pegging our FY21F EPS (earnings per share) of 31.6 sen to a revised target PER (price-earnings ratio) of 15.0x, which is the average of its historical five-year rolling PER.”
“We opine that this is fair given that there is a potential upward earnings trajectory following the recent announcement by the government on the repackaging and distribution of Covid-19 vaccine within Malaysia – of which Pharmaniaga is one of the front runners to secure the tender,” Noor Athila said in a note today.
MIDF maintained its buy call for Pharmaniaga shares, she added.
Kenanga’s Choo raised his TP due to Pharmaniaga’s improved short- to medium-term outlook.
Choo said the Pharmaniaga’s share price had jumped since July on talks that the company would be selected to package the Covid-19 vaccine once it is developed.
“However, we caution that such talks are premature and even if selected, there may be multiple packagers of the vaccine. It is also unclear at this stage as to the financial impact of such a venture, mindful that the government will likely want to see it delivered in the most competitive manner possible.
“The recent run-up in its share price has rendered current valuation to be unattractive, which seems to have overpriced the positive near-term prospects. Reiterate ‘underperform’ (call on Pharmaniaga shares),” Choo said in a note today.
MIDF and Kenanga issued their notes following Pharmaniaga’s announcement on Weds (Aug 19) of its second-quarter financial results.
According to the pharmaceutical company, net profit increased to RM9.98 mil in the second quarter ended June 30, 2020 (2Q20) from RM9.28 mil a year earlier.
For 1HFY20, Pharmaniaga said cumulative net profit climbed to RM32.38 mil from RM28.9 mil a year earlier. Pharmaniaga had also declared a dividend of 2.5 sen a share for 2Q20.
