March 23, 2023

Galenica: safe retail and real estate businesses

Galenica: safe retail and real estate businesses

Galenica is a Swiss pharmaceutical and logistics company and it was the main topic of the Obermatt Zoom Coffee Break stock discussion on February 9, 2023. The guest investors and Dr. Stern decided to buy the company for the Obermatt Swiss Value Wikifolio, which you can track and invest in yourself here.

Full disclosure: Galenica is a reference client of Obermatt, buying research from Obermatt for their executive compensation systems.

PRO: The following three points speak for a buy:

  1. Green Obermatt ranks. Value is at 75, making Galenica shares cheaper than 75% of the competitors. Also, their 360° View, which shows the company’s overall performance and sentiment is at 88, which is very good.
  2. Galenica is mostly in retail, which means they are reliable and not exposed to business cycles.
  3. They are also exposed to real estate business, as they manage the two largest pharmacy chains in Switzerland, Amavita and Sun Store, with nearly 400 stores.

CONTRA: The following three points argue against it:

  1. One of the Coffee Chat guest voiced the concern, that the proposed new chairman of the board, Markus R. Neuhaus, already has many mandates, which may reduce his attention to Galenica. The rest didn’t see this as an insurmountable obstacle.
  2. As pharmacy-related distribution channels are moving online, they may face stronger competition in the future. For now, the business is heavily regulated in Switzerland and may stay this way for a while, allowing Galenica to profit.
  3. Galenica is currently protected by Swiss pharmacy regulations and that may change in the future, albeit it is unlikely to happen.

The pro points outweigh the cons in the case of Galenica, so we are certain our guests have made the right decision. Be a part of our Zoom Coffee Break stock discussions yourself, learn more about stock investing from our experienced guests and Dr. Hermann J. Stern, Obermatt’s CEO, help us choose stocks for our Wikifolios and invest in them yourselves.

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