The European Commission is reportedly in advanced talks with Johnson & Johnson (JNJ) to purchase up-front doses of its COVID-19 vaccine candidate.
According to a Reuters report, the EU deal with Johnson & Johnson could be announced as early as next week, but might take a little longer to finalise, and there were still chances it might not happen at all.
The move would be the first arranged by the European Union executive since it was mandated last week by the 27 EU national governments to use an emergency fund with more than 2 billion euros ($2.3 billion) available to reach advance purchase or call-option deals with up to six vaccine makers.
It was unclear whether any deal would involve an advance purchase of the vaccine in testing, or an option to buy it.
The news comes as Johnson & Johnson plans next month to start human clinical trials for its experimental vaccine against the highly contagious coronavirus, which has infected more than 8.36 million people worldwide, with 447,985 deaths.
Johnson & Johnson said it already has supply agreements to produce more than 1 billion doses of the vaccine candidate globally through the course of 2021, should it prove to be safe and successful. There is currently no approved vaccine for COVID-19.
Germany, France, Italy and the Netherlands said last week they had acquired 400 million potential vaccine doses, in principle available to all member states, from U.K. drugmaker AstraZeneca (AZN), which is developing a COVID-19 shot in conjunction with Oxford University. AstraZeneca signed a similar deal in May with the U.S.
Shares in Johnson & Johnson have been on a gaining path since plunging to a multi-year low in March and are now trading around their start of the year level. The stock was little changed at $143.70 in early Thursday trading.
UBS analyst Kevin Caliendo recently cut the stock to Hold from Buy with a $160 price target, as he believes that drug sales over the next few years will be lower than the market anticipates.
“The stock is trading near a historical high relative multiple on 2021,” Caliendo wrote in a note to investors. “We believe upside from here depends more on a view of market valuation than fundamentals.”
Overall, Wall Street analysts are cautiously optimistic on the stock. The Moderate Buy analyst consensus consists of 9 Buy ratings versus 5 Hold ratings. That’s with a $163.42 average analyst price target indicating upside potential of 14% in the coming 12 months. (See JNJ stock analysis on TipRanks).
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