Erste issues “buy” recommendation on Biofarm stock

Erste Bank analysts gave a “buy” recommendation on the stock of Biofarm Bucuresti (BIO) drug maker and indicated a target price of 0.226 RON/share, 33% higher than the stock’s yesterday quote on the market, of 0.17 RON, as they expect the company’s turnover to advance further in the following years also amid the company’s rising market share. Previously, Erste had a “hold” recommendation on Biofarm stock, with a target price of 0.21 RON/share. “Despite the highly unfavourable environment, Biofarm managed to boost its turnover in the first quarter by 21%, to 22.6m RON, and operating income rose by 39% from the same period of 2009, to 7.5m RON. We expect a similar development in the second quarter, followed by slower growth particularly in the last three months of the year, when the crisis will hurt the pharmaceutical market, especially in terms of delayed payments, a phenomenon that may gain momentum,” say Erste analysts. Should Erste estimates materialise, Biofarm is poised to post the biggest turnover leap in the past 5 years, of 18%, to 79m RON, and the company’s profit from core activities is expected to rise by 21% to 16.7m RON.