Swedish Orphan Biovitrum (OM:SOBI): Assessing the Share Price Recovery and Long-Term Investment Potential

Swedish Orphan Biovitrum (Sobi) has seen a notable 11.2% surge in its share price over the past month, raising questions about whether this rebound aligns with meaningful fundamental improvements or reflects speculative momentum. To evaluate this, we dissect the company's Q2 2025 financial results, its updated guidance, and the broader market dynamics shaping its valuation.

Fundamental Improvements: A Closer Look

Sobi's Q2 2025 results underscored robust growth across its core segments. Total revenue rose 13% year-over-year to SEK 6,175 million, with haematology revenue surging 27% at constant exchange rates (CER) to SEK 4,570 million, driven by the successful launch of Altuvoct and sustained demand for Doptelet and Aspaveli/Empaveli, according to Sobi's Q2 2025 report. The immunology segment also delivered an 11% CER increase to SEK 1,288 million, bolstered by strong sales of Gamifant and Kineret, as noted in Morningstar's report. Most impressively, the strategic portfolio-comprising high-growth therapies-generated 65% CER revenue growth to SEK 3,384 million, now accounting for 55% of total revenue, according to the company's earnings call.

Adjusted EBITA margin improved to 34% in Q2 2025 from 28% in Q2 2024, reflecting operational efficiency and cost discipline despite restructuring expenses, as reported by Sobi. Sobi reaffirmed its full-year guidance of high single-digit revenue growth and a mid-30s EBITA margin, per a Marketscreener note.

Valuation and Market Sentiment: Undervalued or Overhyped?

Analysts suggest Sobi's stock remains undervalued. A discounted cash flow (DCF) analysis estimates an intrinsic value of SEK 559.42 per share, 50.7% above its current price, while fair value estimates range from SEK 340.27 to SEK 341.18 in a Yahoo Finance analysis. The company's price-to-earnings (PE) ratio of 21.94x is significantly lower than industry peers, further supporting the case for a valuation gap, as shown by Simply Wall St.

Market sentiment is cautiously optimistic. That Yahoo analysis shows a consensus price target of SEK 344 per share, with optimistic and pessimistic estimates at SEK 381 and SEK 275, respectively, indicating a wide range of expectations. Long-term investors have been rewarded historically, with Sobi delivering an 85% total return over five years according to the same Yahoo piece. However, the stock's 14.5% year-to-date decline highlights near-term volatility, driven by macroeconomic pressures and sector-specific risks.

Catalysts and Risks: Navigating the Path Ahead

Key catalysts for Sobi include the continued adoption of Altuvoct in haematology, the expansion of its immunology portfolio, and cost savings from renegotiated royalty agreements (e.g., a 90% reduction in ex-US obligations with Apellis), which were discussed on the company's earnings call. These factors position Sobi to outperform its 5.5% projected revenue growth in 2025, which lags the industry average of 14%, according to a Simply Wall St results page.

However, risks persist. Competitive pressures in key markets, such as the EU and the U.S., could erode market share, particularly for mature products like Doptelet. Regulatory hurdles in Europe-where Sobi derives a significant portion of revenue-remain a wildcard, with potential delays in approvals or pricing negotiations, as the valuation piece notes. Additionally, the company's reliance on a narrow product portfolio exposes it to clinical or commercial setbacks.

Is the Recovery Justified?

The recent share price rebound appears partially justified by Sobi's strong Q2 performance and long-term growth drivers. The company's strategic focus on high-margin, high-growth therapies, coupled with operational improvements, supports a compelling risk-reward profile. However, investors must weigh these positives against near-term challenges, including competitive dynamics and regulatory uncertainties.

For long-term investors, Sobi's current valuation offers an attractive entry point, particularly if the Q3 2025 report (scheduled for October 23, 2025) confirms sustained momentum in its strategic portfolio and margin expansion, as indicated in Sobi's Q3 2025 invitation. Historical backtesting of Sobi's earnings release events from 2022 to 2025 reveals a positive trend, with the stock outperforming the benchmark by approximately 6% at +10 days and 9% at +30 days, despite a small sample size of 3–4 events. The key will be monitoring execution against its guidance and the broader industry's response to its product launches.

Conclusion

Swedish Orphan Biovitrum's recent share price recovery aligns with tangible improvements in revenue growth, margin performance, and strategic execution. While risks remain, the company's robust pipeline, cost discipline, and undervalued stock price make it a compelling candidate for patient, long-term investors willing to navigate near-term volatility. As Sobi approaches its Q3 report, the market will likely react strongly to any deviations from its guidance, making this a pivotal period for the stock.