KB News Desk
Newer products lift margins and growth outlook as UBS names Celltrion its top Korean healthcare pick
Celltrion’s record second-quarter results have prompted a wave of target-price upgrades from Korean and global brokerages, with analysts highlighting its fast-growing portfolio and improving profitability.
The Korean biopharmaceutical company reported quarterly sales of 1.4 trillion won ($990 million), beating market expectations and setting a record for the second consecutive quarter. Operating profit surged 86.3 percent on-year to 451.8 billion won, lifting its operating margin to 32.4 percent.
UBS analyst Brandon Suh raised his target price on Celltrion to 300,000 won from 280,000 won, while maintaining a “Buy” rating. Suh said the company is unlikely to repeat the series of misses posted in the past given the rapid diversification of the product portfolio lately.
He added that despite improved visibility for stable revenue and earnings growth, Celltrion’s shares remain at historically low valuation levels since listing, making the stock an attractive buying opportunity. UBS named Celltrion its top pick among Korean healthcare stocks.
Daiwa Securities analyst Bae Yoon-ki also lifted his target price to 290,000 won from 260,000 won, maintaining a “Buy” recommendation. He said, “We believe Celltrion is at an early stage of witnessing growth of its young products translate into earnings. We expect this trend to continue, driving further profitability improvement.”
According to Celltrion, sales from newer products increased 76 percent from a year earlier, accounting for 65 percent of total biopharmaceutical product sales during the second quarter.
Mirae Asset Securities analyst Kim Seung-min raised his target price to 280,000 won, citing Celltrion’s vertically integrated manufacturing capabilities and cost competitiveness, which he said support higher profitability than peers.
Shinhan Securities Senior Research Fellow Lee Ho-cheol increased his target price to 290,000 won, reflecting faster market penetration of newer products and the value of the company’s innovative drug pipeline.
DS Investment & Securities analyst Kim Min-jeongset a target price of 320,000 won, expecting strong earnings momentum to continue on the back of products such as Omlyclo, Avtozma, Stoboclo and Osenvelt.
The improving sentiment has been reflected in investment flows. Foreign ownership of Celltrion rose to 24.78 percent at the end of July, up 3.7 percentage points from the beginning of the year. During the same period, foreign investors purchased roughly 1.6 trillion won worth of Celltrion shares despite being net sellers of about 187 trillion won in the broader Kospi market.
Looking beyond biosimilars, Celltrion said it is accelerating development of innovative medicines through both internal research and open innovation. The company currently has 25 new drug candidates under development, leveraging its antibody engineering capabilities built through its biosimilar business.
“Recent target price increases by domestic and global brokerages reflect the market’s recognition of our expanding product portfolio and improving growth visibility,” a Celltrion official said.
“There is no doubt about our long-term growth potential or our strengthening global competitiveness built on both biosimilars and innovative drug development and we will continue working to enhance corporate value.”
