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Genomma Lab Surges in Mexico on Wal-Mart Distribution Deal

Feb. 19 (Bloomberg) -- Genomma Lab Internacional SAB, the Mexican developer of acne treatments and other over-the-counter drugs, rallied to a two-year high after saying Wal-Mart Stores Inc. will distribute its products in the U.S.

Shares rose 7.7 percent to 31.39 pesos at the close of trading in Mexico City, the highest level since February 2011. The increase was the biggest since May and the largest on Mexico’s benchmark IPC index, which rose 1.1 percent.

“The strategy they are trying to develop in the U.S. is an aggressive effort to continue penetrating that market,” Luis Willard, an analyst at Mexico City-based Grupo Bursatil Mexicano, said in a telephone interview. As the U.S. economy shows improvement, Genomma “is making the investments necessary to take advantage of it,” he said.

The distribution deal with Wal-Mart may boost sales 4 percent to 6 percent on top of the 16 percent increase that the Mexico City-based company projects for 2013, according to Willard, who rates Genomma the equivalent of buy.

The deal with Wal-Mart shows the company is set to benefit from its effort to expand in the U.S., according to Jose Maria Flores, an analyst with Grupo Financiero Ve Por Mas SA. Flores raised his target price to 39 pesos from 35.50 pesos.

“Sales in the U.S. will be the main catalyst for future growth for the company,” Flores wrote in a report today.

To contact the reporter on this story: Danielle Verbrigghe in New York at dverbrigghe@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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