GRFS - Grifols: Looking At The Longer-Term 2025-2027 Upside After No Sale

2025-02-27 12:58:12 ET

Summary

• Grifols remains a strong long-term investment due to its leading position in the plasma industry and improving financial fundamentals, despite short-term volatility and lack of a dividend.
• The company's revenue and EBITDA growth, improved leverage ratio, and significant liquidity highlight its resilience and potential for future profitability.
• Grifols' valuation is attractive, with a potential upside to €20/share, driven by EPS growth and market expansion in plasma-derived products.
• I maintain a "BUY" rating for Grifols, expecting a significant return on investment over the next 1-4 years.

Dear readers/followers,

It's time for an update on the Medical company Grifols, S.A. (GRFS). It's been about 4 months since I last updated on the business, with that update being specific to an event where Brookfield Asset Management tried to buy out the company. The transaction committee in Grifols ultimately advised against such a buyout due to the value of the business (in their eyes). In my article from November, I pointed out why I thought this decision was a good idea, and why I went deeper into the company at that time.

Since that article, found here, the company has slightly outperformed the Index, but the important thing to me is what happens going forward in 2025-2028. Because we've established (or I consider it established) that €10.5/share native, which was Brookfield's offer ( Source ) isn't what Grifols should be traded at, the question then becomes what value the company should be traded at, and how much of an upside we can expect from this....

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