On Wednesday, CFRA maintained a Hold rating for Grifols SA (NASDAQ:GRFS) (GRF:SM) (OTC: GIFOF) with a consistent price target of EUR10.00. This decision comes in the wake of Brookfield Capital Partners (WA:CPAP) announcing they will not proceed with their plan to acquire the Spanish healthcare firm. The analyst from CFRA highlighted that the price target is based on an EV/EBITDA multiple of 11x, which aligns with Grifols (BME:GRLS)' three-year average.
The backdrop to this rating affirmation is the recent decision by Grifols' Board of Directors to advise against accepting Brookfield's indicative offer. Last week, the board considered the EUR6.45 billion bid for all outstanding shares to be lower than the company's true value and its future growth potential. This move followed initial discussions in July regarding a potential acquisition by Brookfield and the founding family of Grifols.
With the acquisition no longer on the table, the focus is expected to return to Grifols' operational performance. CFRA anticipates that sustained demand and the company's cost-effective production will continue to support earnings. However, caution is advised due to Grifols' high leverage ratio. Despite some progress in reducing debt, the company's leverage remains higher compared to its industry peers.
Grifols, a leader in the production of plasma-derived medicines, has been navigating a challenging financial landscape. The analyst's reiteration of the Hold rating reflects a balanced view of the company's prospects, acknowledging both its operational strengths and financial challenges.
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