Dechra's animal spirits undiminished

Tip Updates 

Dechra's animal spirits undiminished


Tip Update: Buy at 2322p

Tip style
Risk rating
Our previous tip
We said BUY at 1699p on 10 Jul 2017
Tip performance to date

Last time out, we noted that while Dechra (DPH) “may have the financial firepower to keep shopping…acquisition opportunities are becoming few and far between”. Well, the fast-expanding veterinary pharmaceuticals group has identified two in the form of Dutch animal pharmaceuticals firm AST Farma and European animal-focused company, Le Vet.

The total consideration for these acquisitions is €304m (£266m), made up of a 75 per cent cash component with the remainder in new Dechra shares. To part-fund the deals, the group is to raise £105m through a placing of 5.1m new shares at 2,050p apiece, which represents around 5.5 per cent on its existing share capital. The group will also initiate a drawdown on a new banking facility.

IC View

At 2,322p, the shares are 37 per cent in advance of last July’s buy call and the historic price/earnings premium to peers has further widened. But the group has demonstrated an ability to drive earnings through well-targeted acquisitions and effective execution of its strategic objectives. We remain in the buyers’ circle. Buy.

Last IC View: Buy, 1,970p, 4 Sep 2017


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