Redcare Pharmacy Shares Defy Analyst Caution and New Rival

In a notable divergence from recent trends, shares of Redcare Pharmacy advanced on Thursday despite a cautious analyst note from UBS and the confirmed market entry of a formidable new competitor. This positive price action occurred against a backdrop of significant stock weakness over the past year, prompting questions about the drivers behind the resilience.

The session's gains placed Redcare among the better performers within the MDAX index. After a softer opening, the equity turned positive, closing at 65.25 euros. This move represents a tentative recovery attempt, considering the stock has declined by over 50% in the last twelve months.

The upward movement came even as UBS released research shifting its rating to "Neutral" from a previous "Buy" recommendation, though it maintained a price target of 74 euros. Concurrently, the German drugstore chain dm launched online sales of over-the-counter (OTC) medications on December 17, directly challenging Redcare's core digital pharmacy business. Historically, the entry of such established retail giants has pressured pure online players due to investor fears of intensified price competition and compressed margins.

Underlying Business Challenges and Divided Sentiment

The company is navigating a complex transition, balancing growth ambitions with the path to sustainable profitability. For 2024, Redcare reported a loss per share of approximately -1.21 euros, with its market capitalization standing near 1.34 billion euros. This financial picture underscores that the market is awaiting consistent proof of profitability.

Analyst perspectives currently reflect this uncertainty. While Deutsche Bank, Baader Bank, and Jefferies reaffirmed their "Buy" ratings this week, UBS's move to a more neutral stance highlights a split in market opinion. The range of views illustrates the ongoing debate between seeing significant potential and maintaining restrained expectations.

Should investors sell immediately? Or is it worth buying Redcare Pharmacy?

Technical and Sentiment Indicators Show a Battle

From a chart perspective, initial signs of stabilization are emerging. The share price has defended the 60-euro level, which marks its 52-week low, recovering toward the mid-60s. However, the current price remains nearly 53% below its 52-week high of 138.40 euros, emphasizing the depth of the preceding decline.

The Relative Strength Index (RSI) sits at a neutral 49. The share price is hovering near its 50-day moving average of 66.14 euros but remains well below its 200-day average of 92.93 euros, suggesting a phase of consolidation rather than a confirmed trend reversal.

Data revealing new short positions reported on December 18 indicates that some institutional investors continue to bet on, or hedge against, further downside. This creates a counterbalance to buyers who may view the severe year-long sell-off as overdone and see the current levels as an opportunity to establish positions.

The Road Ahead: Scrutiny on Competition and Metrics

The coming quarters will be critical in assessing the tangible impact of dm's online foray on Redcare's business. Key performance indicators such as website traffic, order volumes, and conversion rates will be closely watched in comparison to pre-launch periods.

Near-term, news flow regarding e-prescription volumes and competitive developments will likely be key price drivers. The next major fundamental catalyst is scheduled for March 4, 2026, when Redcare publishes its next set of financial results. That report will provide concrete evidence of whether the combination of rising competition, prior steep share price weakness, and mixed analyst sentiment is resulting in business stabilization or further pressure on revenue and earnings.