Just a few years ago, DocMorris was considered a pioneer and beacon of hope among Europe’s online pharmacies. Today, little remains of that initial euphoria. On the contrary: the stock market view looks bleak. Over the past twelve months, the share price has lost around two-thirds of its value. The dream of profitable growth seems far away, raising questions about the sustainability of the business model. Management, however, remains calm and reaffirmed its revenue and earnings guidance for 2025 as well as its medium-term targets after the first half of the year.
The first semester has shown that DocMorris has so far failed to get the high costs for logistics, infrastructure, and marketing under control. The online pharmacy, which operates mainly in Germany, increased its losses in the first half of the year, largely due to higher spending on a TV advertising campaign, despite higher sales. With revenues up 10.2% to CHF 572.1 million, the adjusted operating loss (Ebitda) rose to CHF 28.8 million – 43% more than in the same period last year. On the revenue side, prescription medicines (RX) provided a strong tailwind with an increase of 43.5%. CFO Daniel Wüest nonetheless draws a positive conclusion: “With our revenue growth in the first half, we are on track. Our results, especially in the second quarter, have structurally improved and show that we are clearly moving towards sustainable profitability.”
Management sees no reason to deviate from the guidance issued in April, which calls for an increase in external sales of more than 10% and an adjusted Ebitda between minus CHF 35 million and minus CHF 55 million. The longer-term plan also remains in place. The company aims to break even at the Ebitda level in 2026 and generate a positive free cash flow in 2027. With a medium-term annual revenue growth rate of around 20%, DocMorris ultimately targets an Ebitda margin of about 8%.
With these targets, management signals confidence that stricter cost discipline and a gradual scaling of the business will soon have positive effects on the profit and loss statement. These prospects are not unrealistic, given the overall environment. DocMorris operates in the growth field of “digital healthcare services.” Consumers are increasingly willing to order medicines online. A growing awareness of digital solutions and the expectation that electronic prescriptions will be introduced nationwide in the medium term both support the business model. In addition, the company has a strong brand and loyal customers, with a reorder rate of 76% that could help pave the way to profitability.
At the same time, however, competition is also increasing. Brick-and-mortar pharmacies are expanding their digital offerings, while new online providers are entering the market with aggressive pricing strategies. The well-known drugstore chain dm announced at the end of last year that it plans to enter the market for non-prescription but pharmacy-only medicines. According to earlier statements, the launch is planned for the second half of 2025.
As noted at the outset, the stock market is currently taking a harsh view of the company’s development. For investors, the key question is whether the gap between growth and profits can be closed as promised. The coming quarters will provide the answer. Until it becomes clear whether the current weakness in the share price offers a buying opportunity or whether the stock remains a long-term problem child, patience will be required. Analysts are also waiting on the sidelines. Since mid-April, the average price target has hardly changed and remains close to the CHF 10 mark. On closer inspection, however, there are major differences: while Jefferies sets a fair value of CHF 12, Berenberg sees it at only CHF 8.10. UBS analysts recently cut their target from CHF 8 to CHF 5.90. The stock is currently trading around that level.
Until the future direction of the DocMorris share becomes clearer, investors can bridge the time with a yield-enhancement product. For the new Softcallable Reverse Convertible, it makes no difference whether the share rises, stagnates, or falls over the next 21 months. The product offers a guaranteed coupon of 12.00% p.a., paid quarterly to investors. In addition, no barrier is included, which means there is no risk of barrier breach. The underlying share can therefore develop freely. To receive the full nominal amount back at maturity, it is crucial that DocMorris trades above the strike price at the end of the term. This strike will be fixed at a low 50% of the initial price. Due to the softcallable feature, the term may be shortened to as little as six months.
DocMorris is struggling with stock market losses while at the same time searching for remedies. Both situations can be turned into opportunities with leveraged products. Leonteq's product range includes a wide variety of warrants and mini-futures that allow for both long and short speculation. If the DocMorris share continues to fall, short positions or puts are the right choice. If, on the other hand, the company finds a “prescription” for profitability, the stock could quickly rebound. In such a comeback, long (call) products can fully unfold their return potential.
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