Hungary

Richter’s Shares Receive Unexpected Target Price

Investors are optimistic about the future of Gedeon Richter Plc, as MBH Bank predicts a potential 50 percent increase in revenue for the Hungarian pharmaceutical giant in the coming years. The bank, which began tracking Richter’s shares in September, has deemed them to be extremely undervalued and has issued a buy recommendation, as reported by World Economy.

MBH Bank has set a target price of HUF 13,105 (approximately EUR 33.06) for Richter shares, marking a more than 23 percent increase from the closing price on Monday. This target price is one of the highest among analyst consensus, with only one analyst forecasting a slightly higher figure of HUF 13,124. The median analyst consensus stood at HUF 12,000.

According to the bank’s analysis, Richter’s shares are significantly undervalued compared to its industry peers, with a widening valuation gap in recent times. Despite being an originator company with typically higher margins and growth potential, Richter is currently not enjoying the valuation premium usually associated with such companies.

One of Richter’s key growth drivers is Cariprazine, marketed as Vraylar in the US, which is the fastest-growing selling oral antipsychotic in the country. The drug is also undergoing phase 3 clinical research for the treatment of schizophrenia in adolescents, with expected completion in 2025. Successful results could extend the product’s patent protection by six months and broaden its market applicability.

Richter has structured its operations around four strategic business lines: central nervous system (CNS), women’s healthcare (WHC), biotechnology (BIO), and general medicines (GM), supported by significant developments and acquisitions. The company aims to have a new molecule close to market by the end of the decade to sustain revenue and profit growth beyond Vraylar’s patent protection period ending in 2030.

However, MBH Bank analysts highlight potential risks stemming from the Russian-Ukrainian conflict, as a portion of Richter’s revenue comes from these markets. Despite this concern, the bank expects Richter’s revenue to surge by approximately 50 percent in HUF terms between 2024 and 2028, from HUF 834 billion to HUF 1,123 billion.

Although Richter shares showed minimal movement following the buy recommendation, staying close to the previous day’s closing price of HUF 10,630, they have already seen a 19 percent increase since the beginning of the year.

With ongoing acquisitions and expansion plans, Gedeon Richter Plc seems poised for significant growth in the pharmaceutical industry. Investors are closely monitoring the company’s progress and future developments to capitalize on its growth potential.

 

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