Consumer Staples
The Brazilian pharmaceutical market has grown at a ~12% CAGR “forever”, with only one down month going back 20+ years (Apr 20 when ALL stores were closed). RD has consistently gained ~50bps of market share every year since 2007 and is bigger than the #2 through #5 players combined. The presenter highlighting the stock at MYST’s Consumer Event envisions considerable upside to earnings, underscoring management’s “phenomenal” track record, “incredible” unit economics with ~35% ROIs on new stores, and while current EBIT margins are ~5%, mature stores are yielding closer to LDD’s. TP R$48 (70% upside).
Edition: 161
- 26 May, 2023