Uniphar PLC (LSE: UPR)

Uniphar PLC (LSE: UPR) is an FTSE AIM 100 Index listed healthcare services company based in Ireland, dedicated to enhancing access to pharmaceutical and medical products and treatments. It operates across three divisions: Uniphar Medtech, Uniphar Pharma, and Uniphar Supply Chain & Retail. This Report covers the Key Recommendation Rationale, Conclusion, and Recommendation on the stock.

Key Recommendation Rationale – Sell at GBX 222.00

• Resistance near Current levels: UPR’s stock price crossed the Resistance (R2) which was stated in the previous report on 05 December 2024 therefore, there can be a possibility of a decline from resistance levels. Considering the market conditions and the price action, it is prudent to exit the stock.
• Limited Organic Growth in Supply Chain & Retail Division: Despite strong overall performance, the growth within the Supply Chain & Retail division appears to be more modest compared to other divisions. Organic growth of 2.7% in this segment is relatively low, especially when compared to the Pharma and Medtech divisions, which experienced more robust organic growth. This raises concerns about the long-term sustainability of growth in this division, particularly in a competitive and cost-sensitive market. The disparity in growth rates could signal challenges in scaling the retail and supply chain aspects of the business as effectively as the other divisions.
• Dependence on Future M&A for Long-Term Targets: Uniphar’s target of doubling EBITDA to €200 million by 2028, with at least 80% of that growth expected to be organic, still leaves a significant portion of future growth reliant on M&A (Merger and Acquisition) activities. While M&A can accelerate growth, it also brings risks, such as integration challenges, cultural mismatches, or overpaying for acquisitions. If Uniphar is unable to identify or successfully integrate suitable acquisitions, it may face difficulties in meeting its ambitious growth targets, potentially impacting investor confidence in the company's long-term trajectory.

Valuation Methodology: Price/ Earnings Approach

Share Price Chart  

Conclusion

UPR is expected to trade at a premium, considering the recent outlook and guidance, cost optimization strategies, and the reduction in interest rates. For conducting the valuation, the following peers have been considered: Integrated Diagnostics Holdings PLC (LSE: IDHC), Totally PLC (LSE: TLY) and CVS Group PLC (LSE: CVSG).

Given its current trading levels, the recent strategic investments and partnerships, recent rally in the share price, relative valuation, and associated risks, it is prudent to exit the stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the closing Market Price of GBX 222.00 as of 24 March 2025.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 24 March 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.