Shares were up 7% on Tuesday on the back of an agreement with Pfizer Inc. (NYSE:PFE) to supply excipients, which are substances than improve the efficacy and delivery of the active pharmaceutical ingredients in a drug, to manufacture the US pharma company’s COVID-19 vaccine candidate.
These excipients come from the UK chemical company’s recent acquisition of Avanti Polar Lipids.
According to the investment bank, the deal should be value-neutral as it will likely result in an earn-out payment of up to US$75mln to the previous owners of Avanti, which should broadly offset the three years’ earnings contribution from this vaccine.
The underlying earnings (EBIT) contribution should be around GBP25mln in the year to December 2021.
JP Morgan upgraded the target price to 5,700p from 4,250p which still implies a 15% downside potential.
“The stock reaction yesterday seems excessive to us… Fundamentally, we like the company but not the valuation,” analysts commented.
Shares dipped 2% to 6,549.19p on Wednesday morning.