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Grifols SA GRFS

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Maintaining Our Grifols Fair Value Estimate Following Expected Plasma Supply Weakness in Q1

Karen Andersen, CFA Sector Strategist

Analyst Note

| Karen Andersen, CFA |

Grifols' first-quarter results were in line with our estimates on the top line and above our estimates on the bottom line, as Grifols has managed to hold profitability relatively steady despite COVID-19-related plasma supply constraints. We're maintaining our $23/EUR 19 fair value estimate for class B shares. Beyond the pandemic, we continue to view Grifols as holding a narrow moat, despite new competition from FcRn drugs like Argenx's efgartigimod, which is on track for U.S. approval in its first autoimmune indication, myasthenia gravis, by the end of 2021. We expect this new class of drugs will leave Grifols and other leading plasma players with significant remaining immunoglobulin demand in patients who will not be eligible for the new treatments, with some autoimmune sales and also the core business for immune deficiency patients (roughly half of current immunoglobulin sales) likely to be preserved longer term. We're also encouraged by continued strength in other plasma-derived protein franchises, including albumin (China) and alpha-1 antitrypsin (in the U.S. and Europe).

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Company Profile

Business Description

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 the firm's bioscience business contributed 78% of sales in 2019. Grifols also has smaller segments including diagnostics, hospital supplies, and biosupplies. Diagnostics is now roughly 14% of revenue following the Novartis and Hologic deals.

Contact
Avinguda de la Generalitat, 152-158, Parc de Negocis Can Sant Joan
Barcelona, 08174, Spain
T +34 935710500
Sector Healthcare
Industry Drug Manufacturers - General
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type
Employees 24,000

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