So far this month, Grifols is by far the worst performer in the Ibex 35, down 24%, followed by Colonial, down 9%. In the cumulative exercise, it loses 4%. The blood products company, which has a significant presence in the US, has already been hit hard by the Fed’s rate hikes over the past year, which are making its debt significantly more expensive. And in recent days, messages from the institution’s President, Jerome Powell, warning that interest rates could rise more than expected and stay high for longer have weighed heavily on the price.
In this sense, Antonio Castelo, Market Specialist at iBrokers, stresses that “Grifols’ fundamental problem is its high level of debt, which is the result of its policy of inorganic growth, almost always at the expense of acquisitions”. Currently, the net debt to Ebitda ratio is 8x, and until it improves, “it’s best to stay on the sidelines,” insists the expert, who reiterates that “the market wants debt on everyone case sinks”.
In addition, Castelo also points out that he misbehaved in 2022 and saw a rotation of sectors in early 2023, so it was expected that those who had done worse could be among the winners this year. “At a time when stocks were rallying, many investors were looking for stocks with the opportunity to rotate.” Grifols started the year on the right foot but soon turned around, only to fall further. “Since mid-February the uptrend has broken down and he has lost everything he has gained.”
Add to that the resignation of Steven F. Mayer as Executive President, who had been in office for barely four months, which Antonio Castelo says does not convey a very good image of the company.
From a technical point of view, Grifols has suffered a strong downward acceleration since April 2020 and there is no structure or pattern to be seen on the monthly chart to suggest that it can turn significantly higher, there is no trend reversal, so the target Ángel Cotera, Market Specialist at BBVA Trader.
Despite this current outlook on its chart, the analyst consensus reported by Reuters continues to give firm long-term buy advice with a target price of $17.25, which is what it is a potential of 69% from current prices.