The papers of the laboratory service provider, which went public in April 2021, temporarily fell by 6.2 percent to 10.97 euros in morning trading. At times they cost 10 cents less, which was the lowest level in the relatively recent history of the stock market. However, analysts tend to see the mood for the papers weighed down rather than the company’s fundamentals.
As Europe’s largest laboratory operator announced on Wednesday evening, the Portuguese competition authority (AdC) has initiated proceedings against two subsidiaries. Accordingly, the two SYNLAB subsidiaries, together with competitors and a local industry association, are said to have violated competition law between 2016 and March 2022.
According to a trader, AdC’s step is negative for SYNLAB, but according to him the expected price drop is exaggerated. “The allegations are country-specific and are limited to the activities of the two subsidiaries in this country,” he justified his assessment, which is also confirmed by analyst James Vane-Tempest. The antitrust case launched in the southern European country is likely to affect sentiment rather than fundamentals, the Jefferies Research analyst wrote.
As analyst Jan Koch from Deutsche Bank wrote, the AdC “obviously objects to the fact that collusion took place during the period mentioned, although it should be noted that the prices for diagnostic tests are generally regulated in Portugal”. Since SYNLAB was only informed about the allegations on Wednesday, it was not yet possible for the company to estimate the possible consequences. However, Koch refers to cases from other companies in the past and expects that the possible consequences, “if at all”, will most likely be limited to a fine in the low double-digit million range.
Koch is not surprised that the SYNLAB share is still under pressure: “Portugal accounts for three percent of SYNLAB’s group sales, which is above the group average.” However, the Deutsche Bank expert qualifies that not all branches of SYNLAB’s company in Portugal are affected by the allegations.
However, the SYNLAB shares have been under pressure for some time. After the IPO, it initially rose to a record of EUR 25 until November 2021. But then the Corona momentum would subside and the course would turn down. Since then, the papers have lost around 56% in value. The share certificates are now also listed well below the price of 18 euros at which they were floated on the stock exchange in spring 2021.
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