Equity analysts at Erste Group Research have reiterated positive outlooks for two major Romanian-listed companies - MedLife (BVB: M), the country’s largest private healthcare provider, and Sphera Franchise Group (BVB: SFG), operator of the KFC, Pizza Hut and Taco Bell brands, according to recent reports posted on BVB Research Hub.

While each faces distinct market pressures, both reports emphasize long-term strengths that underpin their current Accumulate recommendations.

MedLife: Strong positioning and organic growth support Accumulate

For MedLife, analysts raised their target price to RON 7.4 per share and maintained an Accumulate rating, citing a “positive trend” supported by both organic growth and the benefits of prior acquisitions. The company posted a 20% year-on-year revenue increase in Q1 2025, driven primarily by hospitals and laboratories, which expanded volumes by 31% and 28% respectively.

Although net profit decreased due to higher financing costs, MedLife’s underlying performance remains robust. Analysts highlight several arguments for maintaining a positive stance:

Strong Organic Growth Potential: Around 16% of MedLife’s 20% revenue growth was organic, showing that the company’s existing network can support expansion without heavy new investments. Facilities in Bucharest, Brasov, Arad and several new hospitals still have significant unused capacity.

Benefits of Prior Acquisitions: Years of M&A activity have made MedLife a dominant national player. Despite higher debt, the expanded footprint gives the firm pricing power and the ability to grow volumes even during investment pauses.

Technology and Innovation Strategy: The launch of AI-guided medical tools, a robotic surgery program, and new emergency services at MedLife Medical Park signal a shift toward high-tech medicine—an advantage in a competitive market.

Conservative Market Assumptions Still Support Valuation: Even under a highly cautious scenario with no new unit growth and minimal CAPEX, analysts estimate the fair value remains slightly above today’s price, suggesting limited downside and meaningful upside as normal expansion resumes.

Sphera Franchise Group: Macro pressures weigh on short term, but long-term story intact

For Sphera Franchise Group (SFG), analysts maintain their Accumulate rating and RON 48.3 target price, but with a more cautious tone. The fast-food operator reported a 0.9% decline in Q1 2025 sales, with profits dropping sharply as consumer spending weakened and employee costs rose significantly.

Despite the disappointing quarter, the investment case remains supported by several factors:

Brand Strength and Diversification: While KFC Romania same-store sales fell 6.4%, the company saw strong growth in Taco Bell (+15.6% sales) and KFC Italy (+3.3% SSS). Moldova also posted double-digit growth with new store openings.

Expansion Strategy Still Intact: Sphera plans 13 new restaurant openings in 2025, including new KFC units and the launch of an entirely new concept, Cioccolatitaliani, aimed at diversifying its customer base. No stores were closed in Q1, signaling network stability.

Manageable Debt and Solid Cash Position: Despite higher investments and weaker profitability, the company’s net debt/EBITDA remains low at 1.42x, well within comfortable limits for the sector.

Achievable 2025 Guidance: Management expects 12% revenue growth and a 9.8% rise in EBITDA for 2025, driven by delivery expansion, digitalization, and cost discipline. Analysts agree these targets remain achievable, especially if consumer sentiment improves in the second half of the year.

Outlook: Cautious but constructive

Both companies face macroeconomic uncertainty - higher labor costs, elections, and fragile consumer sentiment. Yet the analysts’ expectations remain optimistic.

For investors, the reports highlight different types of opportunities: MedLife as a compounder in a growing healthcare sector, and Sphera as a recovery and expansion story within consumer services.

BVB Research Hub offers a wide range of reports on Romanian listed companies by local and international brokerage firms and other valuable resources for investors, such as company comparisons, ESG scores, and financial education tools.

editor@romania-insider.com

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