Midcap analysis: PharmaNutra stronger than its peers. Assigned a buy rating with TP at 42 euro.

On 5ᵗʰ February, Midcap produced the “Small Touch” survey highlighting how PharmaNutra is performing more consistently that its peers.

As a comparison, Midcap examined the 2020 results just published by Biogaia, one of PharmaNutra’s main peers. Midcap expects that the Tuscan Group, despite the pandemic year having affected sales, can close 2020 positively, with revenues that should reach 57.7 million euros, up + 6.5% y/y.

If results circulated by Biogaia show an EBITDA 2020 of about €24 million (margin 34.3%), down 2.5% compared to 2019, for PharmaNutra, the Midcap analysts foresee an EBITDA 2020 of 17.2% higher than 2019, at €15.5 million (27% margin).

If Biogaia reported a net income of €17.1 million, down 2.4% with a 24% margin on revenue in 2020, for PharmaNutra Midcap expects adjusted net income of €10.8 million, up 28% compared to the previous year.

Considering the last five years, the income statement growth rates of PharmaNutra have been much better than Biogaia. Over these years, PharmaNutra has managed to grow at a higher rate than its Swedish peer and to constantly improve its margins.

In particular:

• Revenue CAGR16-20 = 15.2% against 6%.
• EBITDA margin CAGR16-20 = 4.9% vs. -2.5%.
• Net margin CAGR16-20 = 12.4% vs. -5.3%.

In P/E terms, PharmaNutra is currently trading at a 31% discount compared to Biogaia, a difference MidCap considers too high considering recent trends. At the 42€ Target Price assigned to PharmaNutra by the analysts, the Pisa Company would have a Price/Earnings 2021E ratio of 40x, however 13% lower than the Price/Earnings2021E ratio of Biogaia of 45.3x.

The full report can be downloaded at this link.