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Edison Investment Research Limited
 London, UK, 4 December 2019 Edison issues outlook on Laboratorios Farmacéuticos ROVI (ROVI) Following Laboratorios Farmacéuticos ROVI's (ROVI's) recent investor day, we have reviewed our near-term forecasts. Specifically, we upgrade our Becat (enoxaparin biosimilar) peak sales forecasts and increase toll manufacturing revenue growth rates for 2020/21, as we now have more confidence in the underlying demand for heparins and the pre-filled syringe business. Highlights from the investor day include a review of ROVI's operational performance in the last few years, including successful development of Becat, positive data from proprietary ISM asset DORIA and the multiple catalysts expected in 2020-22 that we forecast will enable ROVI's top-line sales to double to ~€600m in 2023. Next events include the ongoing Becat roll-out and EU and US submission of DORIA in Q120 and H220 respectively. We value ROVI at €1.42bn or €25.2 per share.  We increase our valuation of ROVI to €1.42bn or €25.2/share vs €1.35bn or €24.1/share previously. We have upgraded our sales forecasts following the investor day. Our valuation is underpinned by Becat's strong growth potential, while the opportunity for DORIA in the US and EU is key, contributing 17% and 13% to our valuation, respectively. Longer-term guidance for 2x 2018 revenues and 2.5x pre-R&D EBITDA in 2023 is achievable and implies pre-R&D EBITDA margin expansion of 500bp over the next five years to 25.3% from 20.3%. A stable dividend with a three-year average 33% pay-out ratio also adds value.Â
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