RBC Capital Markets, a global investment bank, has issued a new note on Swiss dermatology company Galderma, predicting a slowdown in its second-quarter sales growth. The bank expects constant-currency sales growth to ease to 18% in Q2, down from 26% in the first quarter. That would land near the low end of Galderma's own full-year guidance of 17% to 20% growth.
Despite the anticipated cooling, RBC raised its price target on Galderma shares to CHF 175 from a previous level. The increase reflects confidence in the company's longer-term prospects, particularly around its drug Nemluvio and expected margin improvements. The new target suggests upside from current trading levels, though it does not guarantee future performance.
What's behind the growth slowdown?
Galderma, best known for its prescription and over-the-counter dermatology treatments, has been riding a wave of strong demand. But RBC's analysis suggests that growth is normalizing after a particularly strong Q1. The 18% forecast for Q2 is still robust by most standards, but it marks a clear deceleration.
The bank made only minor adjustments to its medium-term forecasts. It trimmed revenue and adjusted earnings per share (EPS) estimates for 2026 through 2028. Adjusted EPS is a measure of profit that strips out one-time items, giving a clearer picture of ongoing operations. These small tweaks indicate that RBC sees the current slowdown as temporary rather than a sign of deeper trouble.
Galderma is scheduled to report its Q2 and first-half results on July 23. The company will also hold a Capital Markets Day in the second half of the year, where it is expected to provide more detail on its strategy and long-term outlook. Investors will be watching closely for any updates on product pipelines and margin targets.
Why the price target rose despite slower growth
RBC's decision to lift the price target while forecasting slower near-term growth may seem contradictory, but it reflects a focus on the longer horizon. The bank's analysts are betting that Nemluvio, a treatment for certain skin conditions, will become a significant growth driver in the coming years. They also expect Galderma to improve its profit margins as it scales up operations and manages costs.
This kind of forward-looking assessment is common among analysts. Short-term hiccups are often overlooked if the underlying business story remains intact. For everyday investors, the key takeaway is that RBC sees value in Galderma's future earnings potential, even if the next quarter's numbers are less impressive.
It's worth noting that price targets are not predictions of where a stock will trade. They represent an analyst's estimate of fair value based on their models and assumptions. Actual outcomes can differ significantly, especially if market conditions or company performance change.
What it means for investors
For investors holding Galderma shares, the RBC note provides a mixed picture. The near-term growth slowdown could weigh on sentiment, but the raised price target offers a vote of confidence in the company's longer-term trajectory. The upcoming Q2 results and Capital Markets Day will be critical events to watch.
Investors should also consider the broader market context. Galderma operates in the competitive dermatology space, where new product launches and patent expirations can quickly shift fortunes. Companies like Eli Lilly have also been active in this area, as seen in a recent Truist analysis raising Eli Lilly's price target on strength from drugs like Mounjaro and Zepbound. While those are different treatments, the competitive landscape matters for all players.
Additionally, currency fluctuations can affect Galderma's reported results. The company reports in Swiss francs, but it earns revenue globally. A strong franc can reduce the value of overseas earnings when converted back. RBC's constant-currency growth estimate strips out this effect, giving a clearer view of underlying business performance.
For those looking at the broader market, recent moves in other sectors also offer context. For instance, the Nikkei rose 1.4% on an AI chip rally, showing how tech trends can drive market sentiment. Meanwhile, the IMF raised growth forecasts for South Korea and China on the back of the chip boom, highlighting how global economic forces interact with individual company stories.
Ultimately, RBC's note is one data point among many. Investors should use it as part of their own research, not as a sole basis for decisions. The upcoming earnings report and Capital Markets Day will provide more concrete information to assess Galderma's trajectory.
