LS Securities on the 17th said PharmaResearch is expected to maintain earnings momentum on increased fourth-quarter inbound (foreigners visiting Korea) medical tourism, entry into the peak season, and initial sales reflected to its European partner. It maintained a Buy rating and a target price of 800,000 won. PharmaResearch's previous-day closing price was 563,000 won.
PharmaResearch's share price fell 18% after the Aug. 8 second-quarter earnings announcement. Although second-quarter results beat the consensus, concerns about earnings grew as sales-related indicators such as inbound medical tourism and export data for July–August showed a month-over-month decline.
Cho Eun-ae, an LS Securities researcher, explained, "It is judged that the stock adjusted as multiple derating was reflected due to concerns that competition in the domestic skin booster market will intensify."
Third-quarter results were expected to be stable. LS Securities projected PharmaResearch's third-quarter revenue at 142.1 billion won and operating profit at 61.1 billion won. That would be up 59% and 75%, respectively, from a year earlier.
Researcher Cho analyzed, "Domestic institutional sector results appear to have slowed based on July–August inbound data, but in September they likely recorded an all-time high, leaving the quarter roughly flat from the previous quarter," adding, "Exports appear to have continued quarter-over-quarter sales growth, centered on existing key export countries such as Southeast Asia and Eastern Europe."
LS Securities projected that PharmaResearch's earnings momentum will continue. As of September, a rebound in sales-related indicators has already been confirmed, and the fourth quarter is expected to benefit from increased inbound medical tourism due to the implementation of a visa-free policy for Chinese tourists, entry into the peak season, and the reflection of initial sales to its European partner.
Researcher Cho analyzed, "PharmaResearch is showing an overwhelming growth rate compared with its peer group, and considering that exports to advanced countries such as the United States and Europe will begin in earnest from next year, a 12-month forward price-earnings ratio (PER) of 24 times is considered a highly attractive valuation."