Shares of Italian drugmaker Recordati rose after broker Kepler Cheuvreux upgraded the stock to "buy" from "hold," pointing to what it described as compelling valuation levels and a clearer near-term picture ahead of the company's full-year publication of results.
Kepler raised its target price to €57.50 from €55.50 while leaving most of its 2025 forecasts intact. The firm trimmed its 2026 estimates to reflect higher anticipated spending tied to Isturisa, Recordati's treatment for Cushing's disease. Market data cited in the note show the shares were trading at €46.78 as of Feb. 2, implying roughly 22.9% upside to the revised target.
The upgrade comes as Recordati prepares to publish its full-year 2025 results on Feb. 17. Kepler Cheuvreux said it does not expect substantial surprises when the company reports, forecasting that revenue and adjusted EBITDA are likely to land toward the lower bound of the group's guidance range - €2.6 billion to €2.67 billion in sales and €970 million to €1 billion in EBITDA.
Valuation and cash flow
Kepler's analysts highlighted valuation as a central consideration in the upgrade. Their note states the stock now trades at a discount to peers and the broader sector, a reversal from a decade-long pattern in which Recordati typically commanded a premium averaging more than 20% to peers. The brokerage also flagged visible high-single-digit free cash flow yields at current prices.
Model adjustments and near-term investment
After accounting for currency effects and divisional adjustments, Kepler kept its 2025 earnings estimates broadly unchanged. For 2026, the broker reduced its earnings-per-share forecast by about 5% to reflect an assumed €40 million rise in costs associated with a commercial push for Isturisa in the United States. The note says Kepler expects that additional spending to be absorbed from 2027 onward.
The timing of increased U.S. commercial investment is described in the research note as "particularly timely" in light of a recent regulatory development affecting a potential rival therapy. The U.S. Food and Drug Administration issued a complete response letter in late December for relacorilant, a drug developed by Corcept, concluding that the available data did not demonstrate a sufficiently favorable risk-benefit profile.
Kepler said that outcome is favorable for Isturisa, which is already fully approved in the U.S., because it removes a near-term competitor. The brokerage added that any further studies by Corcept could push a rival launch out to around 2028-30, delaying competitive pressure.
Balance sheet and leverage expectations
On the balance-sheet front, Kepler noted Recordati expects net debt to decline to about €1.9 billion by the end of 2025, down roughly €200 million year on year, implying leverage of around 2 times EBITDA. For 2026 the brokerage assumed sales of €2.76 billion and adjusted EBITDA of about €1.0 billion in its modelling.
Ownership overhang and risk-reward
Kepler also flagged Recordati's ownership structure as a continued overhang, noting private equity firm CVC Capital Partners holds about 47% of the shares. Despite that concentration, the broker judged that at current prices - with the stock inexpensive relative to its own history - the risk-reward is skewed to the upside. The report included the assessment that the situation is "appealing at current levels" and that "While the CVC stake overhang remains a key concern, we think that at current levels (with the stock inexpensive relative to its own history) the risk/reward is skewed to the upside."
Investors will watch the Feb. 17 full-year results for confirmation that revenue and EBITDA fall toward the lower end of guidance and to assess the impact of near-term Isturisa investment on margins and cash flow dynamics.
Summary
Kepler Cheuvreux upgraded Recordati to "buy," lifted its price target to €57.50, and adjusted 2026 estimates lower to reflect a €40 million assumed increase in U.S. commercial spending for Isturisa. The broker expects Recordati to report full-year 2025 results on Feb. 17 and sees revenues and EBITDA likely toward the lower end of company guidance. The upgrade reflects a shift from a historical premium to a current valuation discount versus peers, visible free cash flow yields, and a reduced immediate competitive threat following an FDA complete response letter for a rival drug.
Key points
- Kepler upgraded Recordati from "hold" to "buy" and raised its target price to €57.50, implying approximately 22.9% upside from a €46.78 share price on Feb. 2.
- The broker maintained 2025 forecasts broadly unchanged, but trimmed 2026 EPS by about 5% to account for a planned €40 million increase in U.S. Isturisa commercial spend; that investment is expected to be absorbed from 2027 onward.
- Recordati's expected deleveraging - net debt around €1.9 billion by end-2025, implying roughly 2x EBITDA - and a shift to a valuation discount versus peers are central to Kepler's positive view.
Risks and uncertainties
- Ownership concentration - CVC Capital Partners holds about 47% of shares, which Kepler identified as a continuing overhang that could weigh on stock performance.
- Near-term investment in Isturisa - the assumed €40 million rise in U.S. commercial costs for 2026 reduces 2026 EPS and creates short-term margin pressure until spending is absorbed.
- Regulatory and competitive developments - while the FDA's complete response letter for relacorilant reduces immediate competition, future studies or regulatory outcomes for rivals could change the competitive landscape, a possibility Kepler links to a potential rival launch window of 2028-30.