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On Wednesday, Deutsche Bank (ETR:DBKGn) analysts revised their stance on Recordati (BIT:RECI) SpA (REC:IM) (OTC: RCDTF), upgrading the pharmaceutical company’s stock rating from Sell to Hold while maintaining a price target of €52.00. The change in rating comes after a reassessment of the company’s valuation and market dynamics.
In early February, specifically on February 7, 2025, Deutsche Bank had downgraded Recordati to Sell, citing concerns over valuation and the potential for limited EBITDA margin expansion in a year expected to lack significant catalysts. However, subsequent market events have led to a shift in the bank’s perspective. A notable development was the sale of a 5% stake by private equity firm CVC, coupled with a sell-off in the European pharma SMID sector. These factors contributed to a 12% decline in Recordati’s stock price from its mid-February peak of €60.
The analysts now view the risk/reward profile for Recordati as more evenly balanced. The stock is currently trading at a forward-year 2025 price-to-earnings (P/E) ratio of 17 times, which is slightly below the 18 times P/E ratio of its small and mid-size (SMID) industry peers. The maintained price target of €52 reflects this reevaluation of the company’s standing in the market.
Deutsche Bank’s adjustment to a Hold rating indicates a neutral outlook on Recordati’s shares, suggesting that the analysts no longer see the stock as overvalued relative to its expected performance and the broader market context. This update follows the recent sell-off and stake sale, which have altered the investment landscape for Recordati’s shares.
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