The average target price of PRM.MC is 17 and suggests 56% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 16.8. This translates into 56% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 16.8. This suggests 56% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Prim, S.A., through its subsidiaries, designs, manufactures, and commercializes orthopedic products for physiotherapy, thalassotherapy, hydrotherapy, rehabilitation, spa, geriatrics, and support techniques in Spain and internationally. The company offers products for neuro-trauma, cardiovascular, neuromodulation, operating rooms, endo-surgery, plastic surgery, and ENT. It also engages in management of wellness projects, including hotels, resorts, and club sports. Prim, S.A. was founded in 1870 and is headquartered in Móstoles, Spain.

Spain

Prim, S.A.

Healthcare

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has been good and slightly above its peers. On average, the company pays dividends every four months. 

PRM.MC reported revenue of EUR 233mn in the last 12 months, up 8% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 14% from FY23 to EUR 0.64. Market expects EPS to reach EUR 0.78 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 18ppts over past six months and grown 6ppts faster in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

The company has reported modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 9.2% in the last 12 months, a decline from 18.5% in FY23. 

Historically, PRM.MC has reported modest net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 5.0%, a growth from 4.3% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 5.9% in the last 12 months, an increase from 2.4% in FY23. The market analysts predict that RoA will be 2.3% in FY24, again weaker than its peers. 

Prim, S.A. reported a return on equity (RoE) of 9.0% in the last 12 months, up from 3.8% in FY23. The market consensus projects an RoE of 3.6% in FY24, again behind its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 8.2%, below the peers. The consensus estimate for FY24 for RoCE is 12.4%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.4 in the past several years. This ratio implies a average shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

PRM.MC has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity may be unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a very small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note strong debt servicing capacity, adequate interest coverage, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, poor working capital management, and poor cash flow generation.

In highly turbulent market conditions, PRM.MC is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, PRM.MC is as volatile as an index. Put differently, without outstanding market volatility or shocking company news, the stock's price will move with the index. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to negligible. We would also like to highlight the negligible intraday volatility of the instrument. 

Based on key historical and expected multiples, the stock is undervalued relative to its peers. Specifically, the stock is fairly valued on P/E, neutral on EV/EBITD. 

Prim, S.A.

€ 10.65

5

Prim, S.A.

€ 10.65

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

€ 10.65

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