Credit Suisse cuts Galenica on demanding valuation

Galenica AG

27/07/2022 10:52

** Credit Suisse cuts Swiss healthcare services and products
provider Galenica  GALE.S  to "underperform", raises PT by 4.5%
to CHF 70 ($72.83), citing a "relatively demanding valuation"
and an "abnormally high premium" vs home market, despite the
company's solid business
    ** "With a year-to-date performance up 14%, outperforming
the Swiss market by ~45%, and with relative valuation metrics at
historical highs, we see more attractive investment cases in
European Healthcare/Switzerland," CS says
    ** The broker cites difficult comps near term given the
positive impact on performance from pandemic-related initiatives
in 2021
    ** It however sees the company deliver on the high end of
its FY22 guidance range
    ** The broker sees risks to H1 results due on Aug. 9 from
unexpected regulatory changes to the drug distribution process
    ** Mid-term the broker sees challenges from the availability
of qualified pharmacist staff and potentially accelerating wage
inflation
    ** It adds that periods of Euro weakness have historically
reinvigorated cross-border shopping tourism, which may impact
over-the-counter medicines and beauty
    ** Galenica shares drop 6.2% to the bottom of Swiss mid-cap
index  .SMIM 
    
    
($1 = 0.9612 Swiss francs)

 (Reporting by Ozan Ergenay)
 ((Ozan.Ergenay@thomsonreuters.com))