Shares of Emergent Biosolutions (EBS), a biotechnology company specializing in vaccines and bioterrorism related medical and defense products, seem to have found a bottom, providing long term investors an opportunity to buy at a lower price than where shares traded just a few days ago.  In my recent update I noted that it would be prudent to wait until the dust settled on EBS, and it looks as if things are getting sorted out as the company reported on June 27 that it has received a $21.9 million request from the U.S. government to manufacture a Zika virus vaccine based on a government template.  This is good news for the long term as investors in EBS had a significant setback on June 22^nd, when the shares dropped as much as 25% on disappointment  triggered by a smaller than expected order from the U.S. government to produce lots of its major product, a vaccine against the bio-terror microbe known as Anthrax.

But as Wall Street brokers tripped over themselves to downgrade the shares, the company has received another contract from the U.S. government, which in my opinion is a sign that little has changed for EBS as a company, except for what could be a premature sale of shares by trigger-happy investors who overreacted to one news item.  To be sure, no one knows what could be lurking inside the mind of institutional investors these days. And there is no way to know if another shock is waiting for EBS around the next bend.  Still, if the company continues to get government contracts, it’s a positive sign and the shares are trading at a fraction of their recent price.

EBS remains a niche defense company with a clear focus, addressing the fallout of a bioterrorism attack.  Unfortunately, it’s both plausible and unfortunate that the company will have its day, given the ongoing geopolitical situation in the world and the likelihood of long term conflicts in the Middle East and elsewhere expanding.   The fact that the U.S. government is continuing to offer EBS contracts and that EBS has met the standards put forth by the Biomedical Advanced Research and Development Authority (BARDA) as a contract manufacturer speaks well for the long term prospects of the company.

Buy Emergent BioSolutions (EBS) up to $33 with a hard sell stop at $24.

Disclosure: I own shares in EBS.