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Grifols SA ADR GRFS

Morningstar Rating
$7.06 −0.45 (5.99%)
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Company Report

Grifols Earnings: Lowering Fair Value Estimate on Price Concessions and Additional Investment

Grifols reported 2023 revenue growth of 8.7% (10.9% at constant currencies), in line with our expectations, but the firm's profitability was lower than we had anticipated. This was largely due to additional restructuring costs and efforts to improve manufacturing efficiency at Biotest, but also due to rising interest rates on the firm's floating rate debt. We're lowering our fair value estimate to EUR 10.90/$11.80 from EUR 12.20/$13.40 after updating our model for these results as well as the firm's 2024 guidance, which reflects continued strong demand for Grifols' plasma-derived biopharma products, but also potential price concessions and investments in commercial launches and manufacturing. We now model roughly 7% top-line growth in 2024, in line with management's guidance, as well as a relatively steady EBITDA, after factoring in Biotest-related investments and efforts to regain contracts lost during the pandemic. Longer term, we're encouraged by the potential for Biotest's fibrinogen product, which should be filed with regulators by the end of the year and launch in 2026, although competition to the firm's alpha-1 business is looking increasingly likely, with Sanofi's pending acquisition of Inhibrx. Overall, we continue to see Grifols' strong position in the plasma market as warranting a narrow economic moat. The firm's ability to maintain this moat will likely depend on whether its own innovative launches can counter novel, non-plasma-derived product launches from competitors.

Price vs Fair Value

GRFS is trading at a 40% discount.
Price
$7.06
Fair Value
$53.30
Uncertainty
Very High
1-Star Price
$77.44
5-Star Price
$5.40
Economic Moat
Rvvptk
Capital Allocation
Ysygkyy

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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Trading Information

Previous Close Price
$7.51
Day Range
$6.657.22
52-Week Range
$5.5612.15
Bid/Ask
$6.85 / $7.07
Market Cap
$4.79 Bil
Volume/Avg
3.9 Mil / 2.9 Mil

Key Statistics

Price/Earnings (Normalized)
27.45
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 Core
Total Number of Employees
26,314

Competitors

Valuation

Metric
GRFS
CSL
PFE
Price/Earnings (Normalized)
27.4529.1414.45
Price/Book Value
5.411.69
Price/Sales
0.676.482.57
Price/Cash Flow
7.6733.8113.80
Price/Earnings
GRFS
CSL
PFE

Financial Strength

Metric
GRFS
CSL
PFE
Quick Ratio
0.720.950.58
Current Ratio
2.482.150.91
Interest Coverage
1.287.210.74
Quick Ratio
GRFS
CSL
PFE

Profitability

Metric
GRFS
CSL
PFE
Return on Assets (Normalized)
1.17%7.37%4.98%
Return on Equity (Normalized)
4.22%16.50%10.90%
Return on Invested Capital (Normalized)
3.28%10.05%7.28%
Return on Assets
GRFS
CSL
PFE
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