Redcare Pharmacy Shares Defy Expectations with Market Rebound

Redcare Pharmacy NL0012044747

Investors braced for a significant downturn, but the market’s response on Thursday took a different path. Despite the official entry of retail giant dm into the online pharmacy sector, Redcare Pharmacy’s stock demonstrated notable resilience. Instead of extending recent losses, the equity attracted buyers, suggesting the long-anticipated competitive threat had already been factored into its substantially depressed valuation.

Speculation has turned into reality as competition intensifies. The drugstore chain dm has launched online sales of over-the-counter medicines through its digital platform. Its offering includes approximately 2,500 health and pharmaceutical products, shipped from a logistics center in Bor, Czech Republic. This move concretizes the very risk that has heavily weighed on Redcare’s share price throughout this year.

Interpreting the Counterintuitive Rally

In a surprising twist, the stock was trading higher at €65.10 following the news. Market observers characterize this movement as a classic “sell the rumor, buy the news” scenario. Having plummeted more than 50% since the start of the year and recently testing the €60 level, the market had already priced in the new competitive landscape. Paradoxically, the transformation of a vague threat into a certain reality has provided a sense of relief. From a technical perspective, the advance allowed the share price to break above the short-term 21-day moving average, an initial signal of stabilization for traders who follow chart patterns.

Underlying Caution Persists

The current rebound has not dispelled broader market skepticism. Short sellers remain active in the stock, continuing to bet on the company’s structural challenges. Analyst sentiment also reflects caution, with no signs of overt optimism. UBS, for instance, maintains its “Neutral” rating on Redcare shares. While analyst Olivier Calvet sees potential upside with a price target of €74 euros from current levels, this assessment explicitly accounts for the ongoing sector-wide pressures.

The successful defense of the €60 support level marks a crucial first step toward stability. For the medium-term trajectory, the key question is whether Redcare can sustain its profit margins in the coming quarters amidst heightened price competition. Today’s market reaction, however, indicates that investors are granting the company an opportunity to establish a foundation, even in the face of dm’s competitive entry.