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Investing.com - Deutsche Bank (ETR:DBKGn) downgraded Uniphar PLC (LON:UPR) from Buy to Hold on Monday, while raising its price target to GBP3.75 from GBP3.10.
The research firm cited the nearly doubling of Uniphar shares year-to-date as the primary reason for the downgrade, noting this price appreciation occurred without corresponding earnings upgrades. Deutsche Bank believes this confirms the shares were previously undervalued.
Deutsche Bank maintained that Uniphar benefits from healthcare and outsourcing trends affecting the broader pharmaceutical and medical technology industries. The firm highlighted that Uniphar’s gross profits remain highly predictable and recurring.
The research firm kept its forecasts unchanged but switched its valuation methodology from a price-to-earnings basis to a sum-of-the-parts EV/EBITDA approach. This new method better reflects the company’s divisional structure, according to Deutsche Bank.
At current levels, Uniphar trades at approximately 9.5x EV/EBITDA on a next-twelve-months basis, which Deutsche Bank considers "not overly demanding" but also no longer compelling enough to maintain a Buy rating.
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