BioNTech (BNTX 1.78%) might not be the best-known of the leading COVID-19 vaccine makers. The company has been largely overshadowed by its big partner Pfizer and by Moderna, at least in the U.S. However, BioNTech has been the biggest winner in the group so far this year with its shares skyrocketing more than 350%.
But that impressive gain could be a precarious one, based on analysts' projections. Here's why Wall Street thinks BioNTech stock could sink 25% within the next 12 months.
Pessimistic price target
The average 12-month price target for BioNTech stock right now is $261.95, roughly 25% lower than the current share price. That average is based on Refinitiv's survey of 12 analysts.
It's not just that analysts haven't been able to keep up with BioNTech's big gains and are behind the curve with increasing their price targets. Many on Wall Street don't appear to believe that the biotech's gains are sustainable.
BioNTech isn't the only vaccine stock that analysts are at least somewhat pessimistic about. The average 12-month price target for Pfizer is 11% below the current share price. Analysts are also bearish on Moderna, with an average price target 25% lower than the current price of the stock.
What's behind Wall Street's pessimism? More than anything, the lower price target for BioNTech reflects the uncertainties with COVID-19.
No one knows yet how strong demand will be for COVID-19 vaccines on an ongoing basis. A lot depends on the coronavirus itself. New variants could cause governments around the world to buy large quantities of vaccines on an annual basis for a long time to come. However, it's also possible that COVID-19 could become a less serious concern, with vaccine demand declining relatively soon.
Analysts seem to believe the latter scenario is more likely. The average revenue estimate for BioNTech is a little lower in 2022 than it is for 2021. After 2022, analysts project a significant sales decline for COVID-19 vaccines.
There are also some concerns that the Pfizer-BioNTech vaccine might not be as competitive going forward as it has been so far. Several studies have found that the vaccine's effectiveness against the delta variant wanes more quickly than rival vaccines.
BioNTech doesn't have any other product on the market other than its COVID-19 vaccine. That status won't change anytime soon. The company's pipeline doesn't have any other late-stage programs right now. BioNTech's reliance on its COVID-19 vaccine magnifies analysts' concerns about the potential for vaccine sales to slide in the not-too-distant future.
Looking on the bright side
Don't think that Wall Street has completely soured on BioNTech, though. Five analysts surveyed by Refinitiv still rate the stock as a buy or strong buy. Only one of the analysts in Refinitiv's survey has a distinctly negative view of BioNTech.
Bryan, Garnier & Co. even upgraded BioNTech from neutral to buy earlier this month. The investment firm set a price target that reflects a premium of nearly 19% above the biotech's current share price.
It's also possible that BioNTech could shake up Wall Street's views with business development deals. BioNTech CEO Uğur Şahin stated in the company's Q2 conference call that BioNTech will "certainly" make some deals within the next 12 to 18 months.
Analysts tend to focus a lot more heavily on the short term than the long term. Even if BioNTech stock does fall as much as Wall Street expects over the next 12 months, it could still be a big winner over the long run.
Also, the uncertainties surrounding BioNTech work both ways. Although many analysts are skeptical that the demand for COVID-19 vaccines will remain near current levels, they could be wrong.