Redcare Pharmacy Shares Show Resilience Amid New Market Entrant

Redcare Pharmacy NL0012044747

The long-anticipated arrival of dm-drogerie markt in Germany's online pharmacy sector became official this week. Contrary to expectations of a sharp sell-off, shares of Redcare Pharmacy demonstrated notable stability. This market response suggests investors may have already accounted for this competitive development in the stock's valuation throughout the year.

On Wednesday, dm formally launched its mail-order service for over-the-counter medications, operating from a new distribution center in the Czech Republic. The subsequent trading activity defied predictions of panic selling. Instead, a classic "sell the rumor, buy the news" pattern emerged. Redcare's stock gained approximately 3.9% on Tuesday, subsequently stabilizing in a range between €62 and €63.

Strategic Preparations and a Shifting Focus

Redcare had not been idle in the face of this looming competition. In a strategically timed move, the company inaugurated a new high-performance logistics center, also located in the Czech Republic, on December 11. This facility is specifically designed to enhance delivery efficiency for the Austrian and southern German markets.

While dm's entry primarily pressures the over-the-counter (OTC) product segment, Redcare has been strategically increasing its focus on prescription (Rx) medications. This business line has gained significant traction following the nationwide rollout of the electronic prescription, or E-Rezept, in Germany. The company's "Super-App" strategy, aimed at customer retention through value-added services, represents a deliberate shift away from competing solely on price.

Analyst Sentiment and Technical Outlook

Trading volume has remained elevated in recent sessions, indicating sustained institutional interest. Market analysts interpret the share price stability as a sign that the threat from dm was largely priced into the stock during its decline earlier this year. In a December assessment, UBS reaffirmed its "Neutral" rating on Redcare, citing a more balanced risk-reward profile at current valuation levels.

The coming quarterly financial reports will provide the first concrete evidence of whether dm is capturing meaningful market share or if Redcare's customer loyalty initiatives are proving effective. From a chart perspective, the technical outlook remains neutral to cautiously constructive as long as the share price maintains support around the €60 level.