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Grifols SA PRF PERPETUAL EUR 0.05 - Cls B GRF.P

Morningstar Rating
€6.50 +0.02 (0.23%)
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Company Report

Grifols: Downgrading Moat and Capital Allocation Rating on Competition and Weak Balance Sheet

We're lowering our Grifols moat rating from narrow to none and lowering our Capital Allocation Rating from Standard to Poor after reassessing the firm's long-term competitive advantages and debt levels. Grifols has long been admired for its engineering expertise at its fractionation and purification centers, but poorly run and sprawling collection centers have weighed on returns, and we don't think pipeline innovation will allow it to keep up with narrow-moat peer CSL, which maintains a mix of plasma-derived and innovative products. While Grifols is rebounding from temporary pandemic headwinds, we think more fundamental changes to the competitive landscape are finally becoming clearer, and we see significant pressure on Grifols' ability to improve returns despite recent cost control efforts. We're maintaining our EUR 10.90 ($11.80) fair value estimate, which already incorporates revenue growth and adjusted EBITDA near the low end of management's 2024 guidance as well as low- to mid-single-digit revenue growth beyond 2024 as competition in the alpha-1 market and autoimmune-related immunoglobulin indications ramp up. Even with these relatively conservative expectations, shares are trading roughly 40% below our fair value estimate, as we think the market is overly concerned about Grifols' ability to improve its financial health.

Price vs Fair Value

GRF.P is trading at a 277% premium.
Price
€6.50
Fair Value
€33.90
Uncertainty
Very High
1-Star Price
€62.96
5-Star Price
€3.77
Economic Moat
Pwj
Capital Allocation
Jnssd

Bulls Say, Bears Say

Bulls

Grifols is one of the leading producers of plasma products globally. Multiple products allow Grifols to use plasma efficiently, reducing production costs.

Bears

Recombinant versions of Grifols' hemophilia products have eroded sales, and anti-FcRn therapies are entering late-stage testing that could threaten 40% of the immunoglobulin market.

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News

Trading Information

Previous Close Price
€6.49
Day Range
€6.426.55
52-Week Range
€4.8410.98
Bid/Ask
/
Market Cap
€4.41 Bil
Volume/Avg
186,103 / 272,958

Key Statistics

Price/Earnings (Normalized)
27.36
Price/Sales
0.67
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield

Company Profile

As a vertically integrated plasma derivative producer, Spain-based Grifols collects plasma and then manufactures and sells plasma-derived products globally. By acquiring Talecris in 2011, Grifols dramatically expanded its plasma-derived product portfolio, and following the firm's Biotest acquisition in April 2022, the biopharma business contributed 84% of sales in 2023. Grifols also has smaller segments including diagnostics (10% of sales) and biosupplies.
Sector
Healthcare
Industry
Drug Manufacturers - General
Stock Style Box
Mid Growth
Total Number of Employees
23,737

Competitors

Valuation

Metric
GRF.P
4502
CSL
Price/Earnings (Normalized)
27.3615.6929.71
Price/Book Value
0.760.895.52
Price/Sales
0.671.546.61
Price/Cash Flow
7.657.5134.48
Price/Earnings
GRF.P
4502
CSL

Financial Strength

Metric
GRF.P
4502
CSL
Quick Ratio
0.720.460.95
Current Ratio
2.481.062.15
Interest Coverage
1.281.937.21
Quick Ratio
GRF.P
4502
CSL

Profitability

Metric
GRF.P
4502
CSL
Return on Assets (Normalized)
1.30%2.86%8.11%
Return on Equity (Normalized)
4.69%6.13%18.17%
Return on Invested Capital (Normalized)
3.45%4.78%10.94%
Return on Assets
GRF.P
4502
CSL
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