On Monday, Deutsche Bank adjusted its outlook on Medios AG (ILM1:GR), a pharmaceutical company, by reducing the price target to €23.00 from the previous €25.00. The firm, however, continues to recommend a Buy rating on the stock. The revision takes into account the company's first-quarter performance and the recent acquisition of Ceban, which is expected to significantly enhance Medios's revenue and overall profitability.
The acquisition of Ceban, which was announced in March, was a notable transaction for Medios, costing the company €259 million. This sum included €235 million in cash and €29 million in new Medios shares. At the time of the announcement, the deal was valued at 9x enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), while Medios's valuation stood at approximately 5x EV/EBITDA.
The purchase of Ceban marks a pivotal shift for Medios, as it will result in the company taking on a net debt position for the first time. The initial bridge financing used for the acquisition is slated to be substituted with long-term debt. This strategic move introduces a degree of uncertainty given the current financial environment, which is reflected in the adjusted price target.
The integration of Ceban into Medios's operations is poised to bring substantial improvements to the company's financials. Despite the added leverage on the balance sheet, Deutsche Bank's maintained Buy rating suggests confidence in Medios's potential for growth and profitability following this acquisition.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.