UBS Upgrades Rating#
UBS has recently upgraded Galenica's stock rating from "sell" to "neutral." The price target remains unchanged at CHF85, which is slightly above the current trading level of CHF82.05, suggesting a potential increase of about 4%.
Share Price Decline#
This upgrade comes after Galenica's share price fell approximately 20% since late February. UBS noted that while estimates from sell-side analysts have not significantly changed, expectations from buy-side analysts have adjusted. The stock's dividend yield is projected at 3.1% for the next year, which aligns with its historical average.
Sales Growth and EBIT Margins#
UBS anticipates organic sales growth of around 2% from 2025 to 2030, which is below Galenica's own target range of 3% to 5%. The firm expects earnings before interest and taxes (EBIT) margins to increase from 5.6% in 2025 to 6.2% by 2030. However, UBS also highlighted a possible sales decline in 2029 due to expected changes in regulations regarding over-the-counter drug shipments in Switzerland.
Revenue Projections#
Revenue for Galenica is forecasted to reach CHF4.35 billion in 2026, increasing to CHF4.57 billion by 2030. UBS estimates that diluted earnings per share will be CHF3.92 in 2026 and CHF4.47 in 2028. The stock is currently valued at 12.9 times its expected earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) for 2026, decreasing to 11.2 times by 2030.
Valuation Scenarios#
UBS has outlined two potential scenarios for Galenica's future. In an optimistic scenario, assuming a sales growth of 5.5% and EBIT margins of 8.5% from 2027 to 2030, the stock could reach CHF107. Conversely, a pessimistic scenario, with a sales decline of 2.0% and EBIT margins of 3.7%, could see the stock drop to CHF60. This indicates a potential upside-to-downside ratio of 1.1 to 1.