The company produced some 305 million boxes of medicines last year.Continue reading
In a few years, Gedeon Richter Plc‘s revenue could rise by 50 percent, according to MBH Bank, that started tracking the Hungarian pharmaceutical giant’s shares in September. Richter shares are also extremely undervalued, therefore it is no wonder that the bank immediately gave a buy recommendation, Világgazdaság reports.
The Hungarian MBH Bank started to follow Richter shares with a target price of HUF 13,105 (EUR 33.06 / EUR 1= HUF 396.45) and a buy recommendation, which is more than 23 percent higher than the closing price on Monday. Only one analyst included in the LSEG analyst consensus gave a higher target price for the company, only by a few forints (HUF 13,124), while the median analyst consensus was HUF 12,000.
According to the bank’s analysis, the shares of the pharmaceutical company are significantly undervalued compared to its peers, and the valuation gap has widened even more spectacularly recently.
Originator companies, such as Richter, tend to trade at higher valuations than their generic peers, driven by typically higher margins and higher growth potential. However, this valuation premium is currently not visible at all at Richter.
Gedeon Richter’ headquarters in Budapest. Photo: Hungary Today
Cariprazine, marketed as Vraylar in the US, also represents a high growth potential for the company in the coming years, as it is the fastest growing selling oral antipsychotic in the country, the analyst points out. In recent months, there has also been further positive news: the drug is in phase 3 clinical research for the treatment of schizophrenia in 13-17 year olds. The research is due to be completed in 2025 and, if successful, could extend the product’s applicability and extend its patent protection by six months.
The company has grouped its activities around four strategic business lines:
all of which are being supported by significant developments and acquisitions.
A number of acquisitions have already been announced this year, for a total of HUF 130 billion.
In terms of revenue mix, CNS is the largest segment thanks to Vraylar. Richter’s goal is to have at least one molecule close to market by the end of the decade, as it needs to lay the foundations for further revenue and profit growth by the end of Vraylar’s patent protection period (2030).
However, analysts at the MBH Bank believe that the Russian-Ukrainian war could pose a risk to Richter. Indeed, a significant part of the company’s revenues comes from Russia and Ukraine. The share of these two markets in the company’s revenues is gradually declining, and in the first half of the year they accounted for 15 percent.
MBH Bank expects Richter’s revenues to grow by around 50 percent in HUF terms between 2024 and 2028, from HUF 834 billion to HUF 1123 billion.
Despite the new recommendation, Richter shares were broadly flat on Tuesday, around their Monday closing level of HUF 10,630. Since the beginning of the year, however, they have already risen by 19 percent.
Via Világgazdaság, Featured image: Hungary Today
