Why Emergent BioSolutions Stock Is Falling Again Today

What happened

Shares of Emergent BioSolutions (NYSE: EBS) were falling 4% as of 11:07 a.m. EDT on Thursday after sinking as much as 7.6% earlier in the day.

The stock tumbled earlier this week after the company was forced to halt production at its Bayview facility in Baltimore, Maryland, while the U.S. Food and Drug Administration (FDA) conducted an inspection. This facility had been used to manufacture Johnson & Johnson's COVID-19 vaccine, although no doses had been yet distributed for use in the U.S.

The FDA issued a scathing report from this inspection on Wednesday. These problems led Cowen analyst Boris Peaker to lower his firm's price target for the healthcare stock to $67 per share from $86.

Long rows of COVID-19 vaccine vials

Image source: Getty Images.

So what

There's one silver lining with Peaker's lower price target: It's higher than Emergent's current share price. However, the company has a lot to overcome for investors' confidence to be restored.

First, Emergent BioSolutions must address the FDA's concerns about its Bayview facility. The company stated in a press release that it "is committed to working with the FDA and Johnson & Johnson to quickly resolve the issues identified." It added that the issues "are correctable and we will take swift action to remedy them."

That could be the easiest hurdle for Emergent BioSolutions to jump. The company might have a tougher time winning manufacturing contracts from other drugmakers with its highly publicized problems.

Now what

Investors will obviously want to closely monitor Emergent BioSolutions' actions in remediating the issues at its Bayview facility. It will be even more important to watch the company's quarterly updates over the next year to see if the quality problems at the facility impact the company's financial results.

10 stocks we like better than Emergent BioSolutions
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Emergent BioSolutions wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of February 24, 2021

Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Emergent BioSolutions. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.