Friday, January 21

Rovi finds in the IBEX 35 another catalyst for its action

The Rovi shares went from more to less in the last session of the week, the first after the IBEX 35 Technical Advisory Committee decided that the company will become part of the Spanish selective from next December 20, replacing Viscofan.

For Darío García, an analyst at XTB, “the entry of Rovi to replace Viscofan will mean not only entering the IBEX 35, but also being the focus of all managers that have financial products that physically replicate the index.”

This will mean that they will have to undo positions of the meat casing company to incorporate another pharmaceutical company into their portfolios.

“While the support for the production contract with Moderna is the main positive factor in the actionIt will also be subject to hedging or open interest positions that could push the price down with more force than the potential purchases could contain, ”says García.

A wise decision

The Bankinter analysts point out that Rovi’s entry into the selective complies with all the conditions. “Rovi was closely following Sacyr, other candidates, in volumes and met the minimum capitalization requirement. Regarding possible exits, Viscofan, CIE Automotive and Almirall once again occupied the low positions of the table of volumes and the logical thing was to decide the exit of one of them ”.

The Alliance with Moderna has been fundamental for Rovi’s action, which was only affected by the incidents associated with the vaccine in Japan, as the Renta 4 analysts recall.

On the one hand, “foreign particles” were identified in one batch and two adjacent batches were also blocked. The origin of the particles was identified (friction between two metal parts), corrected and no safety or efficacy problems were identified in the vaccines from these batches.

Nonetheless, the company has registered a better operating evolution so far this year (as of September report date), “placing us slightly above the revised upward guidance for operating income growth of 35-40 percent.”

Looking ahead to the coming months, the development of Letrozole, and vaccination against the coronavirus (this in the medium term) will continue to influence the price.

In addition, the company increased the shareholder remuneration to 125 million euros for a period of twelve months and, on the other hand, it will invest in two new lines that will double the number of vials it will manufacture, something that will also be positive for the action.

What do analysts think of Rovi’s price?

Before Rovi’s entry on the IBEX 35 was already among the analysts’ favorite stocks as the consensus of analysts recommended buying. Specifically, 91.7 percent established this recommendation, compared to 8.3 to maintain and zero percent to sell.

The target price is 68.89 euros, which offers a potential return of 2 percent.

Although there are analysis houses that place the value above 70 euros. Specifically, Caixabank, which sets a target price at 75 euros; JP Capital Markets, at 73 euros, and Intermoney, which believes that the share could go up to 72 euros.

The precedent of Fluidra

The Exceptional value performance in 2021 on the continuum is a sign of good operating performance that it should be maintained, at least, in the medium term, explains Darío García.

Another recent addition to the IBEX35, Fluidra, maintained its bullish context when entering the index, and could act as a reference. The value shows a revaluation of 57 percent in 2021, becoming the second most bullish value within the selective.