Expanding Dermatology Pipeline Will Unlock Future Treatment Horizons

Key Takeaways

• Expansion in dermatology, driven by innovative therapies and strategic partnerships, is boosting adoption rates and market share, supporting long-term revenue and margin growth.
  
• Strong cost management and favorable healthcare trends are expected to sustain elevated profitability and operational efficiency over the coming years.
  
• Heavy dependence on a narrow dermatology portfolio, margin pressures, weak U.S. performance, and rising development costs threaten revenue growth and long-term earnings stability.

Catalysts

Operates as a skin health-focused biopharmaceutical company in Spain, Europe, the Middle East, the United States, Asia, and Africa.

• Strong and sustained expansion of the dermatology portfolio (notably Ebglyss and Ilumetri) is supported by growing prevalence of chronic skin and autoimmune diseases due to demographic shifts; aggressive pipeline launches and label expansions are expected to drive double-digit net sales growth through 2030.
  
• Market tailwinds from increasing healthcare spending and high unmet therapeutic need in dermatology are facilitating favorable reimbursement, premium pricing, and rapid adoption of new therapies like Ebglyss and Ilumetri, elevating revenue growth beyond past trends.
  
• Robust innovation and successful partnerships (Simcere, Lilly, Sun Pharma) have deepened Almirall's late-stage and proprietary pipeline, raising the probability of high-margin new product launches addressing underserved patient populations-supporting both top-line and margin expansion.
  
• Accelerated adoption of advanced biologics and targeted immunotherapies in dermatology, combined with digital tools, is expanding the pool of eligible patients and expediting clinical development, improving the company's ability to capture new market share and drive EBITDA margin gains.
  
• Cost discipline, improved operating leverage as launch infrastructure matures, and solid balance sheet with low net debt are expected to translate ongoing revenue gains into rising EBITDA and net margin over the long-term.

Almirall Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Almirall's revenue will grow by 10.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from 2.0% today to 10.3% in 3 years time.
• Analysts expect earnings to reach €147.0 million (and earnings per share of €0.67) by about August 2028, up from €21.3 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €167.7 million in earnings, and the most bearish expecting €105 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 24.4x on those 2028 earnings, down from 103.1x today. This future PE is lower than the current PE for the GB Pharmaceuticals industry at 29.2x.
• Analysts expect the number of shares outstanding to grow by 0.62% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.49%, as per the Simply Wall St company report.

Almirall Future Earnings Per Share Growth

Risks

• Almirall's strong reliance on key dermatology products, notably Ilumetri and Ebglyss, exposes the company to concentration risk; if these assets lose exclusivity, face unanticipated competition (e.g., new biologic entrants such as Nemluvio or market shifts in atopic dermatitis and psoriasis), or observe price erosion, there could be a sharp decline in revenue and net earnings.
  
• Sustained pressure on gross margins is anticipated due to rising royalty payments and the high cost of goods sold for biologic products, limiting Almirall's ability to expand net margins even as sales rise-this could be further exacerbated if payer systems in Europe or other markets mandate lower prices or stricter cost controls.
  
• The company's ongoing investments in new launches and a significant R&D ramp-up (with R&D spending now at 12.8% of net sales, up from 11.4% the prior year) increase operating leverage and financial risk if the late-stage and early-stage pipeline does not yield successful new revenue drivers, potentially leading to stagnation in top-line growth and compressed future margins.
  
• U.S. operations continue to decline, impacted by generic competition (especially for legacy products like Tazorac and Aczone) and weak uptake of new launches, raising risks about Almirall's ability to diversify its revenue geographically-persistent weakness in the U.S. market could limit opportunities to absorb pricing headwinds in Europe and threaten overall revenue growth.
  
• Broader long-term industry and regulatory trends, such as increasing healthcare cost-containment, the risk of lengthier and more expensive approval processes globally, and potential macroeconomic/geopolitical instability, may slow new product launches, suppress pricing power, and increase development costs, putting pressure on both revenue and earnings sustainability.

Valuation

• The analysts have a consensus price target of €13.25 for Almirall based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €17.0, and the most bearish reporting a price target of just €11.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €1.4 billion, earnings will come to €147.0 million, and it would be trading on a PE ratio of 24.4x, assuming you use a discount rate of 7.5%.
  
• Given the current share price of €10.24, the analyst price target of €13.25 is 22.7% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.