ROVI: 1Q’20 RESULTS (ANÃLISIS BANCO SABADELL)
1Q'20 vs. 1Q'19 ResultsSales: € 101.0 M (+22.9% vs. +26.6% expected and +21.4% expected by the market consensus);
EBITDA: € 20.0 M (+68.5% vs. +50.8% expected and +41.6% expected by the market consensus);
EBIT: € 15.1 M (+100.5% vs. +74.6% expected and +59.3% expected by the market consensus);
Net Profit: € 13.9 M (+101.5% vs. +69.6% expected and +55.1% expected by the market consensus);
1Q’20 Results came in above expectations on the operating level due to lower R&D expenses. The company maintains its 2020 guidance and will review its decision on the dividend. Sales grew in line with consensus expectations (+22.9% vs. 26.6% BS(e) and +21.4% consensus), however, EBITDA beat expectations (+68.5% vs. +50.8% BS(e) and +41.6% consensus) thanks mainly to lower R&D expenses, which fell -35% vs. last year. Excluding this effect, EBITDA would have come in slightly below (-1% vs. consensus) due to costs linked to Covid-19 and to an increase in raw material costs (+40% vs. 2019; already expected). No relevant changes in Net Profit, which underscored the operating improvement.
Net debt climbed +19% on the quarter up to € 19 M due to working capital expansion (€ -27 M, mainly explained by inventories), however, its debt remains at very low levels (0x NFD/EBITDA).
The company maintains its 2020 guidance of mid-single-digit growth (vs. +5% BS(e) and +5.8% consensus) and has announced its decision to postpone the AGM and review its dividend (€ 0.1751/sh., 0.7% yield and 25% payout), which had not yet had a payment date set.
In short, a good set of 1Q’20 results that are in line with expectations, and where we do not expect a big impact, given the recent performance (+33% vs. IBEX since February highs) and the decision to postpone the dividend. In any case, these 1Q’20 results anticipate a positive business performance in the current Covid-19 scenario and we will raise our estimates for EBITDA’20-23 by around +4%, which would leave EBITDA’23 (excl. R&D and incl. Doria Phase III) at levels in line with the company’s guidance of 2.5x vs. 2018 (€ 158 M), bringing our T.P. to €~24.00/sh. (+6% vs. previously; -6% upside), without sufficient upside to change our recommendation after the stock’s good performance (+33% vs. Ibex since February highs). SELL. Target Price: € 22.50/sh (potential -12.45%)
Laboratorios Farmaceuticos Rovi is engaged in the sale of its own pharmaceutical products and the distribution of other products for which it holds licenses granted by other laboratories for specific periods, in accordance with the terms and conditions contained in the agreements entered into with said laboratories.
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