S&P 500 slips, but losses kept in check as Nvidia climbs ahead of results
On Friday, Citi reaffirmed its Neutral rating for NASDAQ:ALVO, Alvotech SA (NASDAQ:ALVO), with a steady price target of $14.00. The firm's position comes after Alvotech's second-quarter financial results aligned with both preliminary announcements and Citi's own projections. The company saw a significant increase in product revenues, which surged approximately seven times to $53 million, slightly above Citi's prediction of $52 million. This rise was attributed to the U.S. launch of bHumira, a biosimilar product.
Alvotech's licensing income showed a remarkable increase to $145 million, a stark contrast to the $2 million loss in the same quarter of the previous year, and was closely in line with Citi's estimate of $146 million. This boost in income was due to achieving various research and development, commercial, and sales-based milestones within its portfolio of biosimilar products.
For the first time, Alvotech reported a positive EBITDA of $102 million in the second quarter, which, although slightly below Citi's forecast of $107 million, was driven primarily by the robust licensing income.
The company has reiterated its full-year 2024 guidance, expecting revenues and EBITDA to be in the range of $400-500 million and $100-150 million, respectively. These figures are in the ballpark of the consensus estimates of $428 million in revenue and $104 million in EBITDA, with Citi's own forecasts slightly higher at $440 million in revenue and $101 million in EBITDA.
The report also highlighted Alvotech's growing order book for bHumira in the United States, which has expanded by about 30% to 1.3 million units. The majority of these revenues are anticipated to be recognized in the second half of 2024. Citi's current outlook on Alvotech remains cautious, and the firm is looking forward to gaining further insights during the conference call scheduled for later today, especially regarding the ongoing commercialization of bHumira in the U.S. market.
In other recent news, Alvotech reported remarkable financial results, with record total revenues of $236 million for the first six months of 2024, a significant leap from the same period in 2023. The company also transitioned to a profit of $65.2 million in Q2, contrasting with a loss in the comparable period last year.
Alvotech's total revenues for the first half of 2024 were over ten times higher than the same period in 2023. However, the company's Q2 earnings per share fell short of analyst estimates, coming in at -$0.61, primarily due to finance costs related to changes in derivative liabilities and early debt redemption.
In other developments, Alvotech announced that its order book for biosimilar Humira in the U.S. for 2024 has expanded from the initial 1 million units to approximately 1.3 million units. The company anticipates that revenues from these U.S. orders will be predominantly recognized in the latter half of the year.
Other recent milestones include positive topline results from studies for its proposed biosimilar to Prolia and Xgeva, and the launch of Uzpruvo, a biosimilar to Stelara, in Europe.
InvestingPro Insights
In light of Alvotech's recent financial performance, InvestingPro data reveals a nuanced picture of the company's market position. Alvotech's market capitalization stands at $3.6 billion, indicating a significant presence in the sector. Despite a notable revenue growth of 14.27% over the last twelve months as of Q1 2024, the company's gross profit margins remain in negative territory at -23.89%, underscoring the challenges it faces in terms of profitability. This is further reflected in the company's negative P/E ratio of -6.43, which suggests investor skepticism about future earnings.
From the InvestingPro Tips, it is evident that analysts are expecting sales growth in the current year, which aligns with the positive revenue trends reported. However, the company's stock price has been volatile, with a significant return over the last week of 9.35%, yet it is trading at a high revenue valuation multiple. This could indicate that the market is pricing in the potential for future growth, despite the current lack of profitability as analysts do not anticipate the company will be profitable this year.
For investors seeking a deeper dive into Alvotech's financial health and market performance, InvestingPro offers additional tips and insights that could be invaluable in making informed decisions. As of now, there are seven more InvestingPro Tips available for Alvotech, which can be explored for a more comprehensive analysis.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.