2023-12-10 12:56:43
Grifols’ blood is circulating again. The company, which returned to profits in the third quarter This year after an ordeal that originated after the pandemic, it has regained some favor from analysts. All this after the past turbulence that led to the appointment of the Swiss Thomas Glanzmannwho was already president, as CEO, replacing the two cousins Víctor and Raimon Grífolswho shared the position.
Glanzmann was appointed CEO in February of this year, following the resignation of Steven F. Mayer for health reasons, and then assumed the responsibility of leading the company in the recovery stage after the pandemic. Three months later, he took over from the Grífols and added the position of CEO to the position of executive president, thus taking full management control.
Raimon and Víctor Grífols, for their part, began to hold positions in the management leadership “of a more specific and functional nature that respond to the real needs that the company has today,” according to the statement issued at that time. In the new stage, with the sale of its 26.2% stake in Shanghai Raas as a priority objective, with which it hopes to obtain around 1,400 million, experts have regained interest in the securities of the company controlled by the Grífols family. There is a possibility of reducing the heavy debt burden that affects the group and which is the element that has caused the most distrust in the markets. In any case, the company has entered into negotiations with the public company China Merchants after stalling talks with China Resources for the sale of its stake in the Chinese company, according to Bloomberg.
This circumstance may delay the completion of the sale, but even so the outlook is positive, according to analysts. Grifols is one of the stocks with a positive balance on the Ibex. The company offers a 12-month forward potential of more than 43%, according to analysts. According to data collected by Reuters, experts place the target price at 18.44 euros. Throughout the current year, the blood products firm’s shares have experienced a real zigzag, with highs above 14 euros and lows of just over 8 euros. Currently its price, located at around 13 euros, represents a cumulative revaluation of almost 20%. According to Bankinter’s analysis, the divestment of Shanghai Raas “would allow Grifols to focus its strategy on boosting its business in the key market of North America, it would cut debt repeatedly rated as high, and it would lower the risk profile.”
The company has now focused on growing its organic business, focusing on the price of plasma and the plant that has begun to be built in Canada. After two quarters closing with accumulated red numbers (56 million in losses in the first semester) due to the impact of the restructuring planestimated at 140 million euros and with the forecast of 2,300 layoffs, the vast majority in the US, the group earned 3 million euros between January and September thanks to a new increase in income, of 11.7%. In the third quarter alone, the profit was 60 million.
Grifols has managed to turn the situation around thanks to the growth of its main business, the supply of plasmacombined with a decrease in the cost per liter and the improvements introduced by the savings plan which he presented in February. Since the pandemic, the company suffered a significant stock price crisis, especially last year, which forced the revolution to be carried out at the top management level, which granted all powers to Glanzmann. The capitalization of the company, which in 2020 reached almost 15 billion, is currently around 7.8 billion.
In presenting its third quarter results, the company highlighted that the period between July and September was marked by “significant revenue growth, an acceleration of profitability and the reaffirmation of its deleveraging commitment.” And the company’s debt was one of the points that most worried investors. With the pandemic, Grifols’ activity was reduced and costs remained high. The debt has practically not decreased, but leverage has improved as the results have improved, which has stood at 6.7 times the gross operating result (EBITDA), compared to 8.6 times a year ago. Presenting the results, the group reiterated its commitment that “deleveraging remains a priority.” The commitment is to reach 4.0x by the end of 2024 and reach 4.0x by the end of 2024. For the Catalan giant of blood products, the results reaffirm its commitment to debt reduction, one of the main problems that it is carrying and accumulating. a debt of 9,540 million euros.
More income
Grifols achieved total revenues of 4,822 million until September, 11.7% more than in the same period of 2022 and 1,597 million in the third quarter alone, 9.0% more driven by the ‘biopharma’ business, which records a solid growth of immunoglobulins and albumin.
Grifols, which has received approval from the US Food and Drug Administration (FDA) for its new immunoglobulin purification and sterile filling plant, located in its production complex in Clayton (North Carolina), one of the largest plants in production of plasma medicines in the world; just recently announced that it has completed Cohort 1 of its Phase 1/2 study (NCT04722887) evaluating subcutaneous alfa-1 (human) protease inhibitor 15% (Alpha-1 15%), a subcutaneous alfa 1 treatment -antitrypsin (AAT), compared to alpha-1 protease inhibitor (human) intravenous fluid. If proven successful in clinical trials, a subcutaneous delivery option would provide alpha-1 patients with the ability to independently administer AAT treatment from home, allowing for greater convenience and flexibility.
Analysts see the quarterly results as positive and a sign of greater than expected improvement in margins. For this reason, Grifols has announced that it plans to close the year in the high band of its adjusted EBITDA forecast, that is, “around 1,450 million euros,” explained Renta 4. The most anticipated of its accounts was the confirmation of the sale of the stake in the Chinese business, with which the company intends to reduce its high leverage, which it continues to claim will reach 4 times by the end of the next financial year.
Analyst consensus
At the moment, the consensus of analysts collected by FactSet still does not believe that its growth in the stock market has been exhausted. In fact, the 18.75 euros that they set as the average target price give it an upward potential of 48% for the coming months, the highest of the entire national index. Up to five analysts who cover Grifols see its shares exceeding 20 euros in the coming months.
Plasma supply has increased by 10%, while the cost per liter continues to decrease, with -22%3 once the operational improvement plan has been executed, which has translated into 450 million euros annualized in cash cost savings .
“The strong revenue growth and improved margins are a consequence of the execution of our growth strategy and the successful implementation of our operational improvement plan,” said the firm’s executive president and CEO, Thomas Glanzmann.
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