(News Bulletin 247) – The research department has lowered its advice on the value to “keep” against “buy” previously, judging that the basis of comparison for the third quarter and the second half is proving difficult.

Virbac is having a bad time. The action of the veterinary laboratory lost nearly 15% over three months when the SBF 120, its benchmark index, fell only 3.4% over the period.

The bad news has been piling up since the start of the summer. On June 19, the company was hit by a cyberattack, which disrupted its services. The company has not yet quantified the financial impacts related to this incident.

At the beginning of July, the group, controlled by the family of its founder Pierre-Richard Dick, was then forced to issue a resounding earnings warning, slashing its forecasts for the current financial year. The group mentioned, in addition to the financial repercussions of the cyberattack, the slowdown in its growth, and temporary limitations in the production capacity of vaccines for dogs and cats, which weighed on the absorption of its fixed costs as well as on its sales. .

The veterinary group may not have eaten all its black bread on the stock market yet. This Monday, Stifel came to exert additional pressure on Virbac shares, by lowering its recommendation from “buy” to “hold”, while adjusting its target to 293 euros against 342 euros previously. This obviously weighs on the Virbac title which lost 3.7% around 12:15 p.m., showing one of the strongest declines in the SBF 120, this Monday.

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A complicated basis for comparison in the third quarter

Stifel is worried about the group’s business prospects. “Even though Virbac continues to outperform the market, the growth delta between Virbac and the market has narrowed in recent quarters and the overall market growth rate has also slowed,” writes the bank.

The financial intermediary lowered its revenue growth forecasts for 2023 and 2024 by 5% and 6% respectively.

Stifel warns in particular that the basis of comparison for the second half of 2022 turns out to be “demanding” and higher than at first glance. Particularly for the third quarter: over this period, Virbac had shown a decline excluding exchange rate effects of 0.2% last year to 304.9 million euros. However, the basis of comparison is more difficult than it seems because the third quarter of 2022 represented in absolute value the “third largest in the history of Virbac” in terms of amount, argues Stifel.

“Therefore, we consider the group’s FY2023 organic growth forecast to be challenging, even in the mid-range because, given the results reported in the first half, it implies 4% year-on-year growth in second half (against 0.2% in the first half)”, also underlines the design office.

After its earnings warning last July, Virbac had indicated that it was aiming for like-for-like growth of between 0% and 4% in 2023, against an increase of 4% to 6% previously.

In addition, Stifel includes in its new forecasts the combination of the decline in volumes and high inflation which should have weighed on the company’s results and margins in the first half of the year. For all these reasons, as well as the uncertainty related to the consequences of the cyberattack, the research office lowered its earnings per share forecast for 2023 and 2024, by 21% and 22% respectively.