UBS raises Galenica to 'buy' seeing growth acceleration, margin expansion

Galenica AG

15/08/2023 11:43

** UBS upgrades Swiss healthcare services and products
provider Galenica  GALE.S  to "buy" from "neutral," expecting
growth acceleration and margin expansion in mid-term
    ** The broker says now "a too negative growth and margin
scenario being priced in," as the stock has significantly
underperformed due to weak H1'23 flu season and recent FY23
guidance cut
    ** Still, it expects sales growth with the latest
improvements in underlying operating results to remain 3.5%
FY23-27E (vs. 2.8% FY10-22), seeing adjusted EBIT margin in FY27
to be 6.4% (vs 5.7% FY23) and continued dividend payments in
future
    ** The brokerage anticipates topline organic grow of about
3.5% in FY23-27E, compared to past average and industry growth
of 2.5%/1-2% per year
    ** UBS sees operating margins of retail-focused products and
care segment growth to surpass Galenica's FY27 target of above
9.5% (vs UBS forecast of 10.4%), supporting revenue prospects of
the company's wholesale segment
    ** Share  in Galenica are up 5.4%, on track for a best day
since March 2020
    ** Out of 6 analysts that cover Galenica AG, ​one rates the
stock "buy," ​​five rate it "hold" and no analysts rate the
stock "strong sell"/"sell" - Refinitiv data

 (Reporting by Amir Orusov)
 ((Amir.orusov@thomsonreuters.com))