Uniphar downgraded to “hold” at Deutsche Numis after sharp share rally
Investing.com -- Uniphar Plc has been downgraded to “hold” from “buy” by Deutsche Numis following a sharp rally that has seen the stock nearly double in value since the start of the year.
The company’s target price was raised to 375p from 310p, with the stock last closing at 340p.
Analyst Kane Slutzkin said the re-rating comes despite the absence of any earnings upgrades, indicating that shares were undervalued earlier in the year.
Uniphar continues to benefit from broad healthcare and outsourcing trends, with gross profits described as highly predictable and recurring.
The company is also viewed as being in a more stable position following the end of the earnings downgrade cycle, aided by a more settled interest rate environment.
While Uniphar remains attractively positioned within the wider Pharma and MedTech sectors, the valuation is no longer as compelling, according to the note.
The company trades at 9.5x EV/EBITDA on a next twelve months basis, which Slutzkin does not consider excessive.
However, the sharp appreciation in the stock price has led to a reassessment of the risk-reward balance.
The new 375p target price is based on a sum-of-the-parts (SoTP) valuation using EV/EBITDA, replacing the previous P/E-based approach.
The change implies a multiple of approximately 11x and is seen as a more accurate reflection of Uniphar’s divisional structure. Forecasts remain unchanged.
Slutzkin said the conditions now support further “bolt-on” M&A activity, though no new deals or changes to earnings expectations were disclosed.
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