One of the most reliable forms of value investing is to look for companies that need extensive corporate action to get back on an even keel. While the benefits may not be immediately apparent, this approach has a good record of delivering long-term gains. Pharmaceutical companies such as Denmark's Lundbeck (DK:HLUN.B) face difficulties that are unique to the sector, but they are just as capable of turning their performance around with the right help from management.
Tip style
Value
Risk rating
High
Timescale
Medium Term
Bull points
- New management team now in place
- Significant regulatory news due this year
- Pipeline is returning to growth
- Promising migraine treatment
Bear points
- Neurological diseases are extremely difficult to treat
- Relatively narrow portfolio
- Risk of drug trial hold-ups
When we last wrote about Lundbeck in March 2022, it had no choice but to undertake one of the most daunting reorganisations that a mature pharmaceutical company had ever attempted.