Daewoong Pharmaceuticals stock 'severely undervalued,' according to analyst

An analyst's report said Daewoong Pharmaceuticals’ current stock price, which closed at 106,000 won ($76) on Wednesday, was significantly undervalued. 

According to Lee Myoung-sun, an analyst at DB Financial Investment, given the company's operating performance, the price should be 160,000 won ($115), a 59 percent increase from its current level.

Lee said Daewoong Pharmaceutical's second-quarter revenue is projected to reach 323 billion won ($232 million), marking a 5.2 percent growth compared to the same period last year. Operating profit is projected at 42.6 billion won ($30.7 million),  up by 17.3 percent. 

The company expects to exceed market expectations by 21.4 percent and achieve 35.1 billion won ($25.3 million) in operating profit, driven by increased sales of Fexuclue, a potassium-competitive acid blocker (P-CAB) for gastroesophageal reflux disease (GERD), and botulinum toxin Nabota.

Lee said Fexuclue prescriptions for the second quarter are estimated to rise by 8 percent to approximately 20 billion won ($14 million) compared to the previous quarter.

Nabota's second-quarter sales are expected to reach 43 billion won ($31 million), a 31.5 percent increase year-over-year, driven by increased exports to “lucrative markets like the U.S.,” the analyst's report said.

“Historically, profitability was heavily reliant on Nabota sales, but since last year, contributions from various ethical drugs (ETC) have significantly contributed to operating profit,” Lee commented on the impact of ETC on Daewoong Pharmaceuticals’ operating profit. 

He emphasized that despite projected revenue growth rates decelerating from the transfer of sales rights for products like Forxiga in the second half of this year, ongoing improvements in operating profit deserve attention. 

“The company has been improving its operating profit since 2021,” he said. “Operating profit is expected to reach 147.5 billion won ($106.3 million) increase this year.”