Richter Shares Jump Most in 6 Months as Milestone Buoys Income

  • Company gets over 20 million euros on Carpirazine approval
  • Shares surge 3.2 percent in Budapest to 4,877 forint

Richter Gedeon Nyrt. shares jumped the most in six months after a milestone payment on its key anti-psychotic drug lifted the Hungarian company’s earnings.

The stock rose 3.2 percent to 4,877 forint by close in Budapest, the biggest daily gain since April 27. About 1.2 million shares were traded, or more than triple the average in the last three months. Net income rose 21 percent from a year earlier to 6.85 billion forint ($24 million) in the the three months through September.

Hungary’s largest drugmaker received more than 20 million euros ($22 million) from its U.S. partner Allergan Plc after the U.S. Food and Drug Administration approved the registration of the drug Cariprazine, Chief Executive Officer Erik Bogsch told reporters. The group’s revenue may stay largely unchanged this year on euro terms, he said, compared with the previous guidance for a decline of as much as 2 percent.

"The results point to strong third-quarter performance, even without the one-off revenues," said Endre Kosa, an analyst at KBC Groep NV’s Hungarian brokerage, who sees the shares rising to 5,000 forint by the end of the year. KBC is upbeat on Richter based on revenue forecasts and improving margins and cost ratios, he said.

The largest producer of contraceptive pills in central and eastern Europe is relying on exports to western Europe, China and Latin America to counter shrinking sales in Ukraine and other former Soviet states. Cariprazine is expected to boost revenue mostly from 2018, Bogsch said in an interview in September.

The company booked a 13 billion-forint net financial loss in the third quarter, widening from 1.1 billion forint a year earlier, as a 16 percent slump in the ruble dented revenue from Russia. Sales from the country, Richter’s biggest market, fell 1.5 percent in the first nine months of the year in forint terms.

There’s a "perceptible decline in Russian purchasing power," Bogsch said. While the company’s financial balance remains positive for the year so far, the company may have to book a full-year financial loss if currency market trends persist, he said.

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