Celltrion's Stock Price at Risk of Falling Below 150,000 Won Despite Consecutive Buybacks

Stock Continues to Slide, Hits 52-Week Low... Down Over 18% This Year
Ongoing Foreign and Institutional Selling... Limited Impact from Share Buybacks

Celltrion has not been able to escape its sluggish stock performance despite a series of share buybacks. Since the beginning of May, continued selling by foreign and institutional investors has put even the 150,000 won price level at risk.

According to the Korea Exchange on May 27, Celltrion hit a new 52-week low during the previous trading day, falling to 150,400 won during the session. Although the stock dropped by more than 1% during the day, it pared losses towards the close and ended at 153,000 won, up 0.20% from the previous session.

Celltrion's stock price has shown a lackluster trend since the start of the year. The share price, which was in the 180,000 won range at the beginning of the year, has fallen to the 150,000 won range. It has declined by 18.4% year-to-date.

The ongoing selling by foreign and institutional investors has slowed the stock's recovery. Foreign investors have been net sellers of Celltrion for 16 consecutive trading days, while institutions have sold for 14 consecutive trading days. This month, foreign investors sold 239 billion won worth of shares, while institutions sold 180.9 billion won.

Despite launching six share buybacks this year, the effect on the stock price has fallen short of expectations. Previously, on May 20, Celltrion announced an additional share buyback worth 100 billion won. The company began purchasing 649,351 shares on the open market starting May 21. This marks the sixth share buyback this year, with the cumulative amount reaching 550 billion won, exceeding last year's 436 billion won. In addition, the total volume of treasury shares retired or scheduled for retirement since January amounts to approximately 900 billion won, surpassing last year's figure of about 700 billion won. Celltrion employees are also participating, believing the current share price undervalues the company's intrinsic worth, and have purchased about 40 billion won worth of employee stock. On the previous day, Seo Jinseok, Celltrion's CEO and Chairman of the Board, purchased 2,610 shares, while Vice Chairman Ki Woo-sung and Vice Chairman Kim Hyungki each bought 2,604 shares, according to disclosures.

Weak earnings and tariff uncertainties are cited as factors behind the stock's weakness. In the first quarter of this year, Celltrion reported consolidated sales of 841.9 billion won, up 14.2% year-on-year, and operating profit of 149.4 billion won, a surge of 870.1%. While this marked a record-high first-quarter revenue, it still fell short of market expectations. Shin Jihoon, an analyst at LS Securities, stated, "First-quarter sales and operating profit missed market expectations by 10.6% and 30.6%, respectively. The bio segment continued its growth trajectory due to an increased proportion of second-tier products, but the non-bio segment posted negative growth due to the sale of Takeda's primary care business rights. Increased contract manufacturing (CMO) volumes led to higher cost ratios, and initial costs from the operation of the third plant were reflected, causing operating profit to fall significantly below expectations."

Seo Geunhee, an analyst at Samsung Securities, commented, "Recently, Celltrion's stock has been weak due to concerns over potential U.S. pharmaceutical tariffs and disappointing earnings. Celltrion is currently in a transitional phase as it shifts to direct sales of biosimilars, and it will take some time for sales channels to stabilize. The current underwhelming performance should be viewed as growing pains."

There are forecasts that performance will improve starting in the second quarter. Ha Hyunsoo, an analyst at Yuanta Securities, said, "From the second quarter, the production of three products with improved yields, including Remsima and Herzuma, will be reflected. These products are expected to contribute to cost improvements with production efficiency about twice that of existing products. This year, performance is expected to be 'lower in the first half and higher in the second half.'"