Alvotech (ALVO): A Bull Case Theory
We came across a bullish thesis on Alvotech (ALVO) on M.V Cunha's Substack. In this article, we will summarize the bulls' thesis on ALVO. Alvotech (ALVO)'s share was trading at $10.37 as of 10th June. ALVO's trailing and forward P/E were 28.73 and 52.91 respectively according to Yahoo Finance.
A scientist in a laboratory working on drug research.
Alvotech is a vertically integrated biosimilars company focused on reducing global healthcare costs by developing more affordable versions of complex biologic drugs. With an asset-light commercialization strategy relying on global distribution partners, Alvotech retains R&D control while limiting upfront sales costs.
Its proprietary Reykjavik-based facility, built for scale and flexibility, supports a diversified pipeline targeting high-value biologics like Humira and Stelara. Despite past delays in FDA approvals, the company is now gaining commercial traction, with AVT02 already launched across multiple geographies and AVT04's U.S. launch slated for Q4 2024. Financial momentum is building: adjusted operating cash flow turned positive in 2024, and Alvotech expects to reach free cash flow positive in 2025, enabling self-funding growth and potential deleveraging.
However, the capital structure remains a key overhang, with over $1B in debt at a steep 12.4% interest rate weighing heavily on profitability. Execution risks also loom large — from regulatory hurdles and manufacturing concentration to limited product diversity and partner reliance.
Valuation looks attractive on a long-term view: the stock trades at just ~3.75x projected 2028 EBITDA, and hitting its targets could imply a >30% IRR, even with dilution. Still, material weaknesses in internal controls and tariff risks add further complexity.
While founder-CEO Róbert Wessman's significant ownership aligns interests, his attention is divided across ventures. For concentrated investors, the risk/reward may feel asymmetric, but for those with a wider net, Alvotech presents a high-upside, execution-dependent opportunity in one of healthcare's most important cost-saving frontiers.
Previously, we summarized a on Medpace (MEDP), highlighting its capital-light model, high client retention, and durable biotech exposure. Similarly, Alvotech (ALVO) is seen as a biotech-driven healthcare play, but with a riskier, debt-laden profile and regulatory overhangs, making MEDP the steadier compounder while ALVO offers higher but less certain upside.
Alvotech (ALVO) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 10 hedge fund portfolios held ALVO at the end of the first quarter which was 9 in the previous quarter. While we acknowledge the risk and potential of ALVO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.
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