Knight had good results lately. Are there other reasons for the constant surge in price given that the market overall is volatile? Also is it finally time to load up on it? Thank you
GUD’s momentum certainly looks attractive. The company used to be viewed as an overlooked pharma distributor, an attractive cash cow that has been repurchasing shares. The business model is acquiring and licensing drug assets and distributing them across Canada and Latin America.
There has certainly been some multiple re-rating from a boring cash cow to an underappreciated growth story, as regulatory submissions in LATAM markets for new drugs could potentially expand the company’s distribution footprint and add incremental revenue streams.
GUD is trading at 40x forward P/E, while topline growth over the next two years is expected to be around 10% and 5%, respectively. The Paladin and Sumitomo businesses appear to be outperforming and the company has been ahead of expectations for revenues over the last few quarters. Some product launches through the year should also drive further growth. These companies typically trade at lower valuations so we might be careful here after the recent run but overall things are looking better at GUD and the outlook remain positive.