The pharmaceutical group Grifols experienced a new day of falls on the stock market yesterday despite the publication on Thursday of the results of the investigation by the National Securities Market Commission (CNVM) which endorses its accounts and does not require it to reformulate them. So, although the stock started the day up 8%, it ended the day up 6% at the close, falling to 7.9 euros.
Financial sources stressed that the report clears up doubts about the accounting fraud that weighed on investor sentiment (and the stock closed up 7.8% on Thursday in New York), but investors they also assessed that the regulator has not closed the possibility of continuing investigations and applying sanctions.
Grifols shares have accumulated a fall of 44% since the attack by the bearish fund Gotham City Research and the company has lost nearly 4,000 million euros of its market capitalization.
Financial sources attributed the stock’s sharp rise in New York to “short-closing,” as traded shares exceeded their usual volume on the Nasdaq by 79%. In the Spanish session, on the other hand, the free investment funds took advantage of the initial rise to recompose their positions.
Likewise, one of the most active bearish funds in Grifols capital, Millennium International, owned by millionaire Israel Englander, informed the CNMV that it had increased its short position to 0.61%. In the CNMV records there are five groups that maintain bearish positions equivalent to 3% of Grifols’ capital, but the short interest is greater, since only funds that exceed 0.5% of the capital must report it of the company
Analysts’ reactions to the CNMV report were mixed. For JP Morgan it is an “excellent support” for the company, since it considers that the new operating profit or ebitda figures and the debt ratio that the group will have to recalculate will be minor adjustments and has already discounted them the market. Bank of America also saw it positively, and emphasized that it clarifies that relations with companies linked to the family have been made “with market conditions and prices”. For Banc Santander, for its part, the report is “a support from the CNMV” for the company and keeps the share price at $27.8, more than three times its current value.
At the other extreme, Bankinter issued a very harsh report in which it highlighted “the damage to the company’s credibility” and the accounting increase in the debt ratio that will force it to sell more assets and “could reach the extreme of being chopped up”, so he recommends selling. Renta4 assesses negatively that the CNMV leaves the door open to more investigations and therefore believes that until Grifols provides the new data that the regulator has requested “we maintain the recommendation of the value ‘under review'”.
