Dechra Pharmaceuticals PLC (LSE: DPH)

Dechra Pharmaceuticals PLC (LSE: DPH) is an FTSE 250 index listed Company focused on global specialist veterinary pharmaceuticals and related products business. DPH has an expertise in products exclusively for veterinarians. This Report covers the Investment Highlights, Conclusion, and Recommendation on the stock.

Investment Rationale – Sell at GBX 3,856.00

• Cash Offer: The stock price jumped more than 35% after DPH confirmed it was in talks over a possible £4.6 billion all-cash offer from Swedish private equity firm EQT.
• Profit Booking: DPH’s stock price has breached the R2 level suggested in the previous report published on 16 March 2023. Therefore, it is presenting a profit booking opportunity.
• Decline in Profitability: The Company’s operating profit has witnessed a YoY decline of around 27.2% and diluted EPS has shown a reduction of approximately 51.3% during H1 FY23.
• Technical Indication: The 14 days RSI of ~86.75 illustrates that the stock price is trading in an overbought territory and indicates a correction in the stock price.
• Macroeconomic Uncertainties: DPH's performance is susceptible to inability to deliver expected acquisition synergies, economic recession, volatile equity markets, high levels of inflation, and rising interest rates.

Share Price Chart  

Conclusion

Based on the macroeconomic challenges, and price action stance, a "SELL" recommendation on Dechra Pharmaceuticals PLC (LSE: DPH)  has been given at the current market price of GBX 3,856.00 (as of 14 April 2023 at 08:08 AM GMT+1).

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 level is 14 April 2023. 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.

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