Shionogi & Co’s Strategic Moves: Balancing Research Expansion and Market Challenges

Analyst Miki Sogi from Bernstein maintained a Sell rating on Shionogi & Co (SGIOF – Research Report) and keeping the price target at Yen1,800.00.

Miki Sogi’s rating is based on several strategic and market considerations. Despite Shionogi & Co’s acquisition of JT Pharma, which aims to enhance their drug discovery capabilities with advanced research facilities, there are concerns about the company’s overall market position. The acquisition, while beneficial in terms of research capacity, may not immediately translate into significant financial gains, as the integration and utilization of these facilities could take time.
Additionally, Shionogi’s focus on expanding its product lineup in the US market through asset acquisitions rather than mergers and acquisitions suggests a cautious approach that might limit rapid growth potential. While their antibiotic Fetroja shows promising growth, the overall market performance and competition, especially in the HIV treatment sector, pose challenges. The company’s current valuation and market performance, as indicated by the underperform rating and price target, reflect these strategic and market uncertainties.

SGIOF’s price has also changed moderately for the past six months – from $13.425 to $15.200, which is a 13.22% increase.