Recipharm (Buy, TP: SEK155.00) - Low-quality earnings beat
Although the Q2 results beat our forecasts and consensus, we would classify the beat as being of low quality given it was driven by an acquisition, accounting changes and FX. Organic sales growth and organic EBITDA growth were both negative. We reiterate our BUY based on an undemanding valuation but have trimmed our target price to SEK155 (165) given the soft organic trend.Recipharm AB and its subsidiaries is engaged as a manufacture pharmaceuticals and perform contract development services for pharmaceutical companies. Co.'s segment are Manufacturing Solids & Others, Manufacturing Steriles, Development & Technology and Other. The manufacturing segments consist of contract manufacturing of pharmaceuticals. The Development & Technology segment provides services to pharmaceutical companies in the drug development phase for new pharmaceuticals.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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