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CA-IB cuts Hungary Egis, Richter target prices over local, Russian changes

CA-IB has reduced its target price on Hungarian pharmaceutical companies Egis and Richter to Ft 31,473 from Ft 36,540 and to Ft 45,298, respectively, following a revision of its model over unfavorable changes to come in Hungary's drug subsidy regime and Russia DLO program.

While analyst Katalin Dani cut the TP on Egis Nyrt (in an analysis issued last week) by nearly 14%, she maintained her “Buy” recommendation on the stock. Dani's rating on Richter Gedeon Nyrt is “Hold”. The analyst underlined that if next year's drugs budget were to be set Ft 320 billion (gross Ft 440 billion) - which currently looks highly likely - and drug spending increased by 10% year-on-year, Richter would need to repay additional Ft 3 billion and Egis another Ft 2.5 billion into the drugs budget. This case, Dani would further trim her target prices to Ft 28,355 on Egis and to Ft 43,493 on Richter. (