Dechra Pharmaceuticals Share Discussion Threads

[jgoold] 03/9/2018 15:52

Buying back in - not one of my better decisions!

[steeplejack] 03/9/2018 14:32

RBC summary taken from FT AlphavilleAgainst our expectations Dechra has reported a 2.9% miss at EPS (albeit in line with consensus) with the underlying EBIT margin not as high as we had hoped(3.7% miss at EBIT) and offset by lower interest costs. With revenues pre-reported at the trading statement there were no surprises by division at the top line(+8.3% underlying growth for the Group) but the Group gross margin was c.82bps light and then the NA Pharma business saw higher costs, which led to a9.0% miss against our divisional EBIT expectations (3.7% at the group level). Standing back, we must remember that FY18 has not been a bad year for Dechra,EBIT growth +21.9%, EPS +18.3% growth, but with this driven by acquisitions (organic EBIT was +9.7%) and, one could argue, priced in at current levels. Fromthe statement we understand that management have invested heavily in the US business, which delivered a strong top line (+18.2% growth), but this top linegrowth was slightly weaker than we had as management withdrew products in Mexico and the top-line growth may now slow as key products reach peak shareand risks grow.On the outlook, we would note from the risk section and highlights in the statement we have confirmed with management that there are a number of headwindswhich could lead to consensus downgrades of c.3-5% in FY19E EPS and 6-8% to FY20E EPS (perhaps in spite of a c3-4% currency tailwind at current rates).Whilst some of these are uncontrollable (Brexit and Iran sanctions with management acting accordingly), we see underlying/growing risks as well detailed in thestatement that are likely to add to the former. Whilst the fundamental appeal of Dechra hasn't changed materially, consensus downgrades on a name currentlytrading on c36x FY19E EPS and an EV of 21.6x EBITDA (assuming downgrades come through) and 1.9x levered at end-FY18 will be tough to swallow forsome. We had been concerned that the shares were overheating and that investors were not factoring in potential risks (customer consolidation and distributorcopycat/generic launches, in particular), so we think they could come under pressure. We look to see the scale of share price move to see if this presents anopportunity.

[jgoold] 03/9/2018 11:52

Back in at 2650. Seems over done.

[steeplejack] 03/9/2018 10:50

(Sharecast News) - Veterinary pharmaceutical business Dechra Pharmaceuticals issued a solid set of preliminary results on Monday, but this was enough to satisfy investors as the shares were sent tumbling. The FTSE 250 firm reported revenue growth of 13.9% to £407.1m for the year ended 30 June, with underlying operating profit growing 24.0% to £99.2m as underlying EBIT margins expanded 200 basis points to 24.4%.Underlying diluted earnings per share were ahead 20.9% to 76.45p.The Dechra board declared a full-year dividend of 25.5p.On the operational front, Dechra highlighted the acquisition of AST Farma and Le Vet in the Netherlands and the European Union, and RxVet in New Zealand.It said it outperformed in the majority of its countries and therapeutic sectors, while making "several" new global product registrations, with new opportunities secured."Dechra has delivered another successful year from both a financial and strategic perspective," said chief executive officer Ian Page.Dechra shares, having scampered up more than five-fold in the last six years, fell 15% to 2,650p, taking them back to where they were around six months ago.It was a "mixed update" said Russ Mould, investment director at broker AJ Bell, that showed "the dangers of a high valuation colliding with less than positive news" after a the strong dynamics behind the animal drug market helped underpin a multi-year advance in its shares."On the face of it, Dechra's full year results still look good with underlying profit, excluding the impact of accounting adjustments on some acquisitions, up more than 20%," he said."What may be concerning the market are references to contingency plans for a 'hard Brexit' and the fact an increasing number of distributors are focusing on the sale and marketing of their own products. These factors could prevent the company churning out the same stellar numbers as it has done historically."

[steeplejack] 03/9/2018 08:51

Outlook

“Following a strong set of results in 2018, the new financial year has started well and in line with management expectations. Good progress is being made on all parts of our strategy, with several new opportunities being realised and recent acquisitions delivering the expected returns. Whilst there are many challenges in the market, which is developing faster than at any time in its history, we believe that our strategy and flexibility to adapt to change positions us well to continue to outperform.”


The market appears to be concentrating on the company’s opening paragraph referring to market changes that draws attention to increasing competition,leading US entrants in Western Europe etc.The stock is on a heady rating in the 30s which makes it vulnerable to profit taking.That said I’m not selling.

[volsung] 03/9/2018 08:28

Bought a few more at 2521p. Looks like an over reaction to me

[jgoold] 03/9/2018 08:21

This is why, from bitter experience, I never hold through earnings.

[huntie2] 03/9/2018 08:19

oh dear....bit of a shock to the system!

[steeplejack] 06/7/2018 08:53

New all time high.

Trading update for year end June imminent

[montyhedge] 08/6/2018 18:26

Valuation is insane.

[volsung] 07/6/2018 08:18

What's not to like monty?

[dab26] 06/6/2018 13:04

All Time High...?

[montyhedge] 06/6/2018 12:52

volsung
Try to like this, but crazy valuation. Whats ath?

[montyhedge] 06/6/2018 07:43

Priced to perfection, hope they can deliver.

[volsung] 04/6/2018 14:37

Bought a few more. New ATH soon hopefully

[badger60] 11/5/2018 04:49

Take a look at HEMO, Hemogenyx, who recently came to the market and are developing a new approach to bone marrow transplant proceedure. Compelling story, talented management/research team, blue chip collaboration partners, and Cornell University is a shareholder.

[volsung] 02/5/2018 17:02

Not a bad day all things considered :)

[steeplejack] 28/2/2018 08:17

Its not that I think Dechra is that cheap at these levels,its just that relatively it stands out as being a good solid investment.There arent that many candidates that you can say that about in this market currently.

[volsung] 27/2/2018 15:56

Nicely up through resistance

[volsung] 27/2/2018 15:54

Good timing steeplejack

[r ball] 26/2/2018 10:47

Hmmm...up with events

[volsung] 26/2/2018 10:46

Oh well. We have knocked back from the ascending trendline. Will hold back a bit before adding.

[steeplejack] 26/2/2018 10:36

Switchback ride.I presume analysts have been given guidance.Also,there are the placees that may be tempted to bank a few profits.That said,bought a few more on pullback.