On Tuesday, CFRA maintained a Hold rating on Grifols SA (NASDAQ:GRFS) (GRF:SM) (OTC: GIFOF) with a stock price target of EUR10.00. The decision follows Grifols' confirmation that its founding family and Brookfield Capital Partners are considering a due diligence process for a possible acquisition, which could result in the delisting of the company.
Despite this development, the firm expressed caution, citing ongoing concerns from Gotham City Research's reports about Grifols' accounting practices.
Grifols' stock experienced a nearly 10% increase after the announcement regarding the potential acquisition interest. However, the share price has seen a significant drop of over 30% since the beginning of the year, largely affected by the negative impact of the Gotham City Research report.
The CFRA analyst highlighted that while the acquisition news has positively influenced the stock price, the overall performance remains subdued.
The analyst's valuation of Grifols is based on an enterprise value to EBITDA (EV/EBITDA) multiple of 11 times, which is below the three-year average of 12.6 times. This valuation reflects a cautious stance in light of the unresolved issues raised by Gotham City Research.
Grifols has acknowledged the due diligence intentions of its founding family and Brookfield Capital Partners but has also stated that the specifics of the potential transaction are still uncertain.
Looking forward, CFRA anticipates that Grifols will continue to see demand for its products and improvements in cost per liter, which are expected to contribute to the company's growth. Nonetheless, the firm has decided to maintain its current rating and price target, opting to keep its opinion and estimates unchanged at this time.
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