Gedeon Richter Nyrt headed for the highest level in almost a year after Erste Group Bank AG raised its price estimate for Hungary’s biggest drugmaker, citing the sales potential of two of its core products.
The shares rose 2.1 percent to 3,905 forint by 3:05 p.m. in Budapest, leading the 0.2 percent advance in the BUX Index. (BUX) Richter surged 13 percent in the third quarter, compared with a drop of 1.9 percent for the benchmark. Erste increased its price estimate on the shares by about six percent to 4,780 forint and said the indication range extension of its Esmya product in addition to potential regulatory approval for its Cariprazine drug bode well for sales.
“Richter’s fundamentally sound story is further augmented by its research and development foray,” Vladimira Urbankova, a Vienna-based analyst at Erste, wrote in a report dated today, maintaining the bank’s buy rating on the shares. Approval from the U.S. Food and Drug Administration for Cariprazine, an antipsychotic, will open “up a new chapter in the company’s history,” according to the note.
Full-year sales at Richter may jump 8 percent to 353 million forint ($1.6 billion), the mean estimate of 11 analysts compiled by Bloomberg shows. Export revenue from Cariprazine, developed with Forest Laboratories Inc. (FRX:US), and Esmya, designed to treat uterine fibroids, will help boost sales by the end of the decade, Chief Executive Officer Erik Bogsch said in an interview on Sept. 27.
Richter shares should be re-included in MSCI Inc.’s Hungarian index at the next review in November based on revamped liquidity requirements, Bogsch said. The stock, which was deleted from the gauge last year, may be re-added following the removal of additional minimum liquidity requirements for MSCI global standard indexes, the New York-based company said in a statement in August.
“The highly likely return to the MSCI index adds one more argument in favor of the stock,” Erste said today.
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