Gedeon Richter Stock Set For Short Term Reversal

BMI View: We now believe that Hungarian generic drugmaker Gedeon Richter's stock is undervalued. The company's share price has underperformed as investors have been wary of domestic drugmakers in light of anticipated government measures to cut reimbursement expenditure and pass increased costs to drug providers.[1] While Hungary's structural reform package will indeed be damaging to drugmakers operating in the market, we believe the fact that Gedeon's revenue exposure to domestic sales is just 13%, is underappreciated. For this reason, we believe the stock will perform well over the coming two quarters as investor perceptions are revised.

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