April 25, 2024

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[THE INVESTOR] Yuhan will be sluggish until next year, but its stock price is undervalued, said Shinhan Financial Investment on Dec. 20, maintaining a “buy” recommendation and 260,000 won (US$240.23) target price. 

It will not be able to meet high fourth-quarter earnings estimates, as its largest active pharmaceutical ingredient client Gilead struggles from slow sales of Hepatitis C therapy, said analyst Bae Gi-dal. Sales of prescription drugs and over-the-counter drugs will come in at 245.8 billion won and 29.4 billion won, respectively, he estimated. 

Earnings in 2018 will be dragged down as its major prescription drugs slow down from expiry of patents, and earnings will reach 1.48 trillion won with operating profit of 86 billion won, forecast the analyst. Sales of OTC drugs will be relatively solid, though, due to improving brand awareness, added Bae.

Although the pharmaceutical company will be slow in the short-term, its valuation is relatively low, and its increasing investments in R&D raises expectations, noted the analyst. 

By Hwang You-mee (glamazon@heraldcorp.com)