Pareto publish their Top Ideas portfolios for Norway and Sweeden. I select from their top 20 stock ideas the ones we like:
Pareto Ideas Summary:
BioInvent – BUY, TP SEK 134 (115)
Closing Q2 with liquid funds of SEK 1.2 bn + SEK 536m from the Exelixis milestone payment and the latest directed issue to specialists like Forbion (so total of SEK 1.7 bn), BINV is among the best capitalized biotech companies in Europe backed by one of the best shareholder bases. After a series of positive clinical trial data in both liquid and solid tumors in 2021 and 2022, BioInvent continued to deliver new clinical data in September with the most exciting (based on scientific rationale and in-vivo & human PK/PD data) program BI-1808 (TNFR2 targeting antibody) having its first safety and single-agent efficacy data released. Based on these progresses we released an update on Sep 26 and increased our target price to SEK 134 (115). We expect that pipeline progression and strong cash position to keep the share price stable in tough times (as it did this year) and to increase when healthcare indices stabilize and even more so if they experience a bit of a relief rally.
Vicore Pharma – BUY, TP SEK 97
In the middle of VICO’s 108% YTD rally on the basis of stellar data in IPF patients, VICO’s share price took a volatile break in September. The COVID-19 program termination induced a -30% stock reaction, which was a great trading opportunity as we pointed out in our newsflash on Sep 21, and then the stock went back up closing September neutrally. After this volatile break, the stock is poised to continue much further in October and November. Why? We expect an IPF readout in late October / early November, analogue to February’s but with close to x2 as many patients, which will cement the drug’s profile in our view (due to the very high, unprecedented effect size reported in these patients i.e. lung function gains in the hundreds of milliliters). As a reminder, drug sales in IPF reached around USD 4 bn last year, comprised of two drugs, one from Roche (Esbriet) and one from Boehringer Ingelheim (Ofev). Despite the two drugs on the market, the median survival after diagnosis is 3-5 years (the drugs are only slightly slowing the decline in lung function in a fraction ). Vicore’s drug, for the first time ever, has shown gain in lung functions in IPF patients that reached the hundreds of milliliters / instead of short-term stabilization or slower decline as competitors. The efficacy demonstrated by Vicore’s drug in the February 2022 readout drug showed a lung function gain of +251mL at week 24 & +751 mL at week 36 – unprecedented and we believe this will soon be further reinforced.
HAFNI – BUY, TP NOK 60
Product tanker rates have gone through the roof as the Ukraine war is sending much-needed diesel volumes long-haul while inventories are running dangerously low. Hafnia delivered a solid Q2 (run-rate P/E 3x) as MRs just finished their best quarter since Q4’04. Q3 will be even better and bookings suggest Q3 EPS of USD 0.53 for run-rate P/E 2x in HAFNI – which alone beats out the mayhem we saw during 2020. Our current NAV of NOK 57 is pushed towards NOK 70 by YE’22 when including Q4 earnings and values up 5% (which might already be history). 2023 estimates are down ~20% y/y despite a healthy tonne-mile demand outlook and virtually no fleet growth – and will be revised higher. The Russia-switch of 1m bpd have not really starting impacting yet, with sanctions coming into force 5 Feb 2023 – and Hafnia is perfectly positioned with a large and healthy levered fleet. BUY / TP NOK60
KOG – BUY, TP NOK 375
We include KOG in our monthly portfolio amid upbeat earnings potential near-term, along with massive contract potential and attractive financials long-term. For Q3, we expect higher activity levels for KM, and positive product mix for KDA to secure solid earnings. With a >NOK 53bn firm backlog and a solid balance sheet, rising defence budgets and improving maritime business, nearly all stars are aligned for KOG. As such, market fundamentals are supportive, and profitable growth set to carry on for the longer. While capital allocation suggests increasing shareholder return ahead. Therefore, risk-reward are on the upside, in our view, where KOG is attractive in an increasingly uncertain world. BUY / TP NOK 375
Disclosure:
The goal of the blog is to provide investment ideas for further research. I/we have a beneficial position in the shares discussed above either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice. Please do your own research before making any investment action.
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