In the second quarter of Newbury’s financial year 2022/2023, the company reported an EBIT of SEK-4.9m (-3.6m), while net sales amounted to SEK1.5m (0.3m). While being somewhat lower than our expectations of SEK1.9m, we argue this is not a significant difference in the long run. The company’s cash position is still in a healthy state at SEK21.2m, slightly above our initial expectations. Our Belief is that this will be enough to finance operations over FY 2022/2023.

During the quarter, Newbury has gained national market approvals for two additional products, Lapatinib Newbury and Dimethyl Fumarate Newbury. We believe that these will contribute to the evergrowing "snowball" of market-ready products and support Newbury’s sales growth in the future. We see the development in market approvals as positive and important for Newbury’s financial performance in the coming quarters.

We value Newbury using a DCF valuation model based on different long-term sales growth and margin assumptions. We reiterate our fair value range of SEK4-14 per share with a base case of SEK8.5, bull case: SEK14, and bear case: SEK4. Accordingly, our base case suggests an upside potential of +50% from current share price levels. We argue that, primarily, increasing sales growth in quarterly reports ahead will be essential in validating the Newbury business model in the eyes of investors and could close our valuation gap.