MADRID. Today we analyze Laboratorios Rovi, Spanish pharmaceutical company of the Ibex 35 that in 2023 is on everyone’s lips due to its spectacular bullish rally, with up to seven consecutive months on the rise and a revaluation that exceeded 50%. It currently has a market capitalization of 2,672 million (thirtieth of the Ibex 35) and in the last three years it has been characterized by chaining very disparate years due to the incidence of covid-19 and the different phases in the manufacturing and distribution of the vaccine.
In 2020 and 2021 its stock price skyrocketed, and after a disastrous 2022, it has used this year to recover, for the moment, half of what was lost last year. This year’s upward trend places it at the top of the most profitable of the Ibex 35. However, since mid-September its price has deflated. Next, let’s delve into the causes.
Somewhat weak market sentiment persists for European pharmaceutical companies, which were closely related to the production of vaccines against covid-19, after learning a few days ago of the reduction in business forecasts announced by Pfizer. The American pharmaceutical giant explains this statement with the pressing decline in revenue from its coronavirus vaccine. We have left the pandemic behind, and faced with a waning vaccination process, Pfizer and other partners in Europe such as the German BioNTech are suffering declines.
Pfizer is not alone in this because the divestments affect the American company Moderna in the same way.. Rovi owes part of the strong momentum it experienced in 2021 to its agreements to manufacture Moderna vaccines, and given the new paradigm shift the brake on income is already evident.
On the other hand, A couple of months ago, the Spanish listed company announced that for the next 12 months it was going to implement an aggressive share buyback program. It estimates that it will eventually incorporate up to 5% of its current capital into its treasury stock and to do so, it allocates 130 million euros to this item. The objective is to direct the existing liquidity of its income statement to remunerate the shareholder thanks to the increase in value of the security in which they trust for the coming months.
Results pending
However, this investment in the company itself has not yet had a direct effect on the price, given that it is still in a very incipient phase. The sharp rise experienced in August is the result of the interest that said announcement aroused in the market. With this move, the pharmaceutical company achieves another objective: that of not having immobile capital for which it currently does not find a destination in mergers or acquisitions within its sector.
We remain very attentive to the results corresponding to the third quarter, which Rovi will announce on November 9. Cyclically, there is an increase in the production of general vaccines in this final part of the year coinciding with the approach of winter. In addition, the company itself announces the expectation of higher revenues from medicines under the Okedi and Becat brands. If its approval is achieved in different geographies and the high volume of counterfeits that are appearing is managed to be eradicated, the final stretch of the year could return to a fruitful path for Spanish pharmaceuticals.
Adrián Hostaled is an analyst at XTB
2023-10-24 04:02:09
#Rovis #bullish #streak
