Grifols is taking one of the worst blows in the game so far this Monday. He has given it more than 5% at the opening of today’s market, although he has now moderated his losses to fall to around 2.5%, closing at 14.75 euros per share. However, it stands at lows not seen since September 2014.
The Catalan company chains four consecutive weeks cutting its price on the stock market, which leads it to position itself as one of the companies so far in 2022, and it has already lost 12% since the start of the year. Investors have opted for the sales after the publication by JP Morgan of a report in which the firm expresses its doubts regarding the Grifols accounts at the end of the 2021 financial year.
In the text, to which the Economist has had access, JP Morgan has estimated that the second half of 2021 will be “worse than expected given that they have less product to sell” which may reduce their income by around 9% year-on-year as well as they anticipate their ebitda margin will be cut “sharply” thanks to declining sales from 25% in the first quarter of last year to 15% for the second half of 2021, according to JP Morgan.
Likewise, from the entity’s analysis department they have indicated a “41% contraction in EBITDA in the second half and compared to the estimate of the market consensus”, according to JP Morgan up to 385 million euros. When confronting the firm’s calculations with that of all the experts collected by Bloomberg, JP Morgan has in turn estimated that the last six months of 2021 will bring 10% less income than those estimated by the market consensus and will yield a earnings per share 50% lower than average, at 0.23 euros compared to 0.48 for the last six months of 2021.
“Although Grifols shares have already underperformed in , we remain cautious in the short term, given the downside of our 2021 and 2022 forecasts and an uncertain pace of trading post-COVID-19 disruption and its very high leverage,” the report concludes.
A potential greater than 60%
However, the market consensus has not lost confidence in the evolution of the price for this year, although it remains with a recommendation to hold predominantly pending new information on the company that will allow another decision to be made.
Thus, the group of experts collected by Bloomberg has estimated that the company has a market share of more than 60%, up to the target price of 23.50 euros. Among the latest updates from the analysts who follow the blood derivatives manufacturer is that of Jaime Escribano, an analyst at Banco Santander, who has estimated this Monday that it is the time to . The expert has placed his target price at 28 euros and, therefore, gives the company an upward potential of more than 90% from its current listing price.
A high indebtedness
Grifols is one of the companies most exposed to , as Bankinter’s analysis department has already pointed out. Its main source of income comes from the manufacture of drugs from blood plasma and this has been affected by the evolution of the pandemic.
On the other hand, the company is highly indebted after the . The Catalan company acquired 90% of Biotest, which is also engaged in the business linked to blood products, for a sum close to 1,100 million euros. After this operation, the market consensus has estimated Grifols’ debt at around 6,900 million euros, according to data provided by FactSet.
On February 28, the company plans to present its results for 2021. The market expects them to show profits of around 473 million euros that it registered in 2020, so it is still far from recovering the levels prior to the outbreak of the coronavirus.
On the other hand, experts have lowered the company’s profit prospects for 2022 so far this year. Thus, with the market consensus estimates as of today, Grifols’ net result for this year would be 577 million euros, 9% lower than the estimates provided at the end of last year.
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