Redcare Pharmacy: Short Covering and Berlin’s Margin Gambit Pull the Stock in Opposite Directions

Redcare Pharmacy shares struggle at €44.52 despite short seller retreat and strong Q1 revenue growth. Political talks on prescription pay could boost margins, but peak investment weighs on profitability.

Redcare Pharmacy’s shares are trapped between a steady retreat by short sellers and a tepid market reception to its operational firepower. At €44.52, the stock has shed 33.75% since January, and Friday’s 2.11% drop pushed it further below its 20-day moving average, halting a recovery rally that had briefly lifted the price nearly 17% off the March lows of €31.00. The technical picture remains fragile: the share trades roughly 2.5% under that short-term average and sits 65.11% below its 52-week peak of €127.60.

The most notable counterweight is the orderly withdrawal of short sellers. Aggregate short interest has fallen to 77% of its high, with ten funds trimming their positions, two standing pat and only one adding. This 23% reduction in bearish bets since March helped fuel a 55% bounce from the trough. Whether further covering can sustain support is uncertain, but the stock now sits 43.61% above its 52-week low, offering a modest cushion.

Operationally, the company delivered a robust first quarter: revenue jumped 18.4% to €849.5?million, adjusted EBITDA rose 58% to €14.4?million (margin improving from 1.3% to 1.7%), and the prescription business starred with 36% group-wide growth and an even sharper 55% expansion in Germany. The active customer base swelled to 14.2?million and 90% of patients reorder. Yet the net loss remained near the prior year at €10.5?million, underscoring the profit challenge.

That challenge is at the heart of a political subplot. Deutsche Bank analyst Jan Koch points to emerging discussions in Berlin about raising the fixed remuneration for prescription medicines. If enacted, such a shift would directly boost Redcare’s margins. Koch maintains a “Buy” rating with a €99 target, while Jefferies is even more bullish at €150 on e-prescription momentum. UBS, however, sets the bar at just €74, flagging a slowdown in the core OTC business.

The company itself has declared 2026 a year of peak investment, pouring capital into a new logistics hub in Pilsen, capacity for 15?million additional parcels, and automation at its Sevenum site. These expenditures forced management to trim the medium-term margin ambition from above 8% to above 5%. Cash has accordingly shrunk to €135.0?million from €203.5?million, partly due to €64.5?million in convertible bond repayments.

The full-year guidance remains unchanged: 13?15% top?line growth, German Rx revenue above €670?million, and an adjusted EBITDA margin of at least 2.5%. The half-year report due in late July will be the first major test of whether margins are tracking that path.

Analyst forecasts are starkly divided – the average target of roughly €95 conceals a range from €54 to €150. For now, the equity moves in a narrow band, tugged by bear covering on one side and uncertainty over whether political tailwinds will materialise to justify the margin narrative. A decisive breakout will require more than technical relief; it needs Berlin to turn its discussions into hard numbers.