Valneva stock initiated at Buy by TD Cowen on Lyme vaccine potential

TD Cowen has started covering Valneva SE (NASDAQ: VALN) with a Buy rating and a price target of $12.00. Currently, the stock is priced at $5.30, reflecting a 45% decline over the past six months and a significant 57% drop from its 52-week high of $12.25. Analyst Tara Bancroft believes the company's base vaccine business provides some protection against downside risks, while the LB6V Lyme disease vaccine, backed by Pfizer's regulatory expertise, holds significant promise.

Valneva estimates that if the LB6V vaccine receives approval by 2035, it could generate around €590 million in royalty revenue. This multivalent Lyme vaccine is seen as having potential blockbuster status. However, the recent Phase III clinical trials showed promising efficacy rates of 73-75%, but the results were not statistically significant due to lower-than-expected event accrual.

TD Cowen argues that the market is currently undervaluing the chances of U.S. approval and believes that post-marketing surveillance could potentially boost negotiations. The firm estimates that the peak global sales for the vaccine could reach approximately €3.1 billion by 2035, generating roughly €590 million in royalty revenue for Valneva.

While the prospects for the vaccine look promising, analysts do not expect Valneva to become profitable in the upcoming year. Investors should consider the company’s financial health and growth potential by accessing Valneva's comprehensive Pro Research Report, available for this and over 1,400 other US equities.