Redcare Pharmacy Shares Hold Firm Amid New Competitive Threat

Redcare Pharmacy NL0012044747

The shares of online pharmacy operator Redcare Pharmacy have demonstrated notable resilience. This stability comes in the face of a significant market development: competitor dm-drogerie markt has officially commenced shipping non-prescription medicines from its new Czech distribution center. While this move into a core Redcare segment was long anticipated as a major risk, the stock has remained steady, trading between €62 and €64.

On Tuesday, the drugstore chain dm began delivering over-the-counter (OTC) pharmaceuticals from its logistics facility in Bor, Czech Republic, to customers in Germany. This action directly targets the lucrative OTC sector, a traditional stronghold for Redcare's business. For months, market analysts had flagged this potential entry as a substantial threat to the company's market share.

Financial markets, however, appear to have already factored this scenario into the share price during its decline over recent months. At the start of the week, Redcare's stock actually registered a gain of approximately 3.9 percent.

Strategic Preparations and a Shift in Focus

Redcare has not been idle in preparing for heightened competition. On December 11, the company inaugurated its own high-performance logistics center, also located in the Czech Republic. This facility is designed to optimize supply chains for Austria and Southern Germany—precisely the region where dm is now becoming active.

Concurrently, Redcare is strategically pivoting to place greater emphasis on prescription medications. The mandatory introduction of the e-prescription in Germany continues to be a growth driver that dm's current model does not address. Furthermore, the firm is leveraging its "Super App" strategy to enhance customer loyalty through expanded service offerings.

Mixed Sentiment from Market Experts

Analyst opinions present a cautious but varied outlook. On December 17, UBS reaffirmed its "Neutral" rating, maintaining a price target of €74. The analysts noted that dm's market entry removes a significant overhang of uncertainty. In contrast, Deutsche Bank remains notably more bullish, sticking to its "Buy" recommendation with a price target of €214.

Adding a layer of market complexity, the stock continues to attract attention from short-sellers. Institutional investors, including D. E. Shaw & Co., are maintaining their short positions, which contributes to ongoing share price volatility.

Financial Forecasts Remain Unchanged

Despite the intensified competitive landscape, Redcare Pharmacy's management has reaffirmed its guidance for the 2025 fiscal year. The company continues to anticipate revenue growth exceeding 25 percent, with an adjusted EBITDA margin projected between 2.0 and 2.5 percent. Current operational metrics suggest business is progressing according to plan.

With the dm risk now a known quantity rather than a vague threat, investor focus is shifting. Attention is turning to Redcare's execution in the expanding e-prescription market and the operational efficiency gains expected from its new logistics infrastructure.