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ALMIRALL: 1Q’20 RESULTS (ANÁLISIS BANCO SABADELL)

1Q'20 vs. 1Q'19 Results
Sales: € 241.3 M (+7.5% vs. -6.0% expected and -2.0% expected by the market consensus);
EBITDA: € 88.3 M (+10.1% vs. -16.5% expected and -11.5% expected by the market consensus);
EBIT: € 57.5 M (+20.8% vs. -26.5% expected and -20.2% expected by the market consensus);
Net Profit: € 48.6 M (+62.5% vs. -13.0% expected and +10.0% expected by the market consensus);
1Q’20 results came in far above expectations on the operating level thanks to a pre-purchase effect. The guidance for 2020 remains unchanged. EBITDA increased much more than expected (+10% vs- 16% BS(e) and -11% consensus) thanks to much better sales figures (+8% vs. -6% BS(e) and -2% consensus), boosted by a pre-purchase effect in the second half of March 2020. However, the company anticipates a strong negative impact from Covid-19 on 2Q’20, especially in the US (~20% sales), where new prescriptions fell -45% (-30% drop in oral antibiotics). The results were better than expected also on the Net Profit level (+62.5% vs. -13.0% BS(e) and +10.0% consensus) thanks to better performance in net financial costs (€+0.2% M vs. €-2.5 M BS(e)).
NFD remained stable, as expected, at € 385 M (1.2x NFD/EBITDA). The company maintains its 2020 guidance prior to Covid-19, suggesting between € 260 M and € 80 M of EBITDA (vs. € 270 M BS(e) prior to Covid-19, which we will cut by around -14%) that will depend on the normalisation of the health systems at the end of the 2Q’20 (in line with our estimate).
Even though it has outperformed the IBEX by +29% since February’20 highs (when the impact from Covid-19 started), the reaction to these 1Q’20 results is being very positive (+5% vs. IBEX) thanks to the much better-than-expected business performance in the 1Q’20 and to fact that the company kept its 2020 guidance unchanged. As we have outlined, we assume a more conservative stance and we will cut our estimates by -12% on average in EBITDA’20-21 in our scenario of V-shaped recovery due mainly to the slowdown of its ramp-up products (Ilumetri, Seysara and Skilarence) as a result of a lower commercial effort and reversion of the pre-acquisition effect in the 2Q’20. With this in mind, our T.P. would fall less than ~-5% to € 17.00/sh. (+36% upside). Even in a negative scenario of U-shaped recovery, the cut to T.P. would be -9%, standing +30% above current trading levels. We reiterate our BUY recommendation. Conference call at 10:00 (CET), where we expect further details on the impact from Covid-19 on April. BUY. Target Price: € 18.00/sh (upside 41.73%)