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2008-10-27 High debt will hurt Bioton?

Bioton, the biotech firm is among a group of WSE-listed companies that stockbrokerage Wood & Company identified as “stocks to stay away from” during the current financial turmoil due to its particularly high debt burden, as measured by net debt-to-equity ratio, Parkiet reported. This company will face increased cost of capital, which will depress its financial results and may even endanger liquidity, according to the stock brokers. Wood & Company advises investors to turn to companies with stronger balance sheets that are less reliant on external financing.

Meanwhile, however, a survey by Gazeta Wyborcza has shown that Bioton is among those members of the WIG20 blue-chip index whose share price has declined relatively the least since the fresh wave of the crisis erupted following the bankruptcy of Lehman Brothers in mid-September. Bioton shares fell 6.8% over that period, compared to a drop of 26% in the WIG20 as a whole and much less than the losses suffered by major banks and property developers, whose shares plunged by 30-40% and more.

Source: pharmapoland.com, modified