GRFS - Grifols: Stay On The Sidelines

2024-07-16 05:00:52 ET

Summary

• Grifols leverage and governance concerns are primarily addressed.
• The company confirms discussions around a potential combined PE/family bid offer.
• Still, there is a high debt and negligible FCF generation to consider. We remain neutral.

In our last assessment, we reported that Grifols' ( GRFS ) valuation looked attractive, but there were (still) too many question marks . In detail, we investigated the new accusations from the hedge fund Gotham City questioning loans and outgoing flows recorded in the company's financial report. In addition, we reported the lack of FCF generation in 2024, as well as the role of Scranton Enterprises. For this reason, we reiterated our Wait And See approach and a not-investable recommendation. Since our last update, Grifols' stock price has appreciated by 31.36%; however, the company's shares are still down 40% year-to-date following leverage/governance concerns. Following the latest positive news, we are back to comment on the Spanish Plasma player....

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