Insiders tend to be value investors. If they’re buying company stock, it’s usually because they believe it’s undervalued.
Here, we are going to highlight an insider purchase at Dechra Pharmaceuticals PLC (DPH:LN). Dechra is a UK-based company that develops, manufactures, markets, and sells pharmaceuticals and related products to veterinarians worldwide. It’s traded on the London Stock Exchange and currently has a market capitalization of £3.87 billion.
Dechra Pharmaceuticals PLC: Insider Buying
Our insider transaction data shows that on April 5, the Chairman of the Board at Dechra Pharmaceuticals, Alison Platt, purchased 2,346 DPH shares at a price of £42.30 per share. This purchase cost the insider around £100,000 and increased her holding by about 170%.
Impressive Leadership Experience
Our attention was drawn to this insider transaction for a few reasons.
Firstly, Ms. Platt has increased her holding in the company by a large percentage. This suggests that she is very confident that the stock is undervalued at these levels. It’s worth noting that our insider data shows that this is her first purchase of company stock for close to two years. It’s also the largest insider purchase at Dechra for several years.
Secondly, Ms. Platt has considerable experience in the business world. Previously, she was the CEO of Countrywide for four years from 2014 to 2018 where she is likely to have gained valuable leadership experience. She also spent over 20 years at BUPA where she served in a number of roles. She has been at Dechra Pharmaceuticals for two years now which means she has had plenty of time to understand how the business operates.
Outperforming the Market
Dechra Pharmaceuticals outperformed what was a strong market in the second half of calendar 2021, benefiting from a continued trend of increased spending on pets during Covid-19.
For the period, total revenue was £332.4 million, up 10.9% versus the same period a year prior. EBITDA climbed 14.9% to £101.3 million and operating profit of £57.4 million was up 42.4%.
Looking ahead, Dechra is well placed to keep growing due to several recent global product approvals. And new submissions to regulators are imminent.
“Trading at the start of the second half remains strong, especially in our major markets which are returning to historic levels of growth as they normalize following the diminishing influence of Covid-19. Future prospects remain excellent as we strengthen the Group's infrastructure, continue to outperform markets and identify and deliver new strategic growth opportunities,” said the company.
Having read through the recent half-year results and seen the confident outlook statement within it we believe that the recent insider purchase at Dechra Pharmaceuticals is bullish. In significantly upping her holding in the company, the Chairman of the Board appears to be signaling that she feels the market is undervaluing the company.