Leader Capital Markets Initiates Rafa Laboratories Coverage With Buy Rating
Leader Capital Markets initiates coverage of Rafa Laboratories with a buy recommendation and a 24 NIS price target, pointing to strong growth potential in pharma and biodefense sectors.
Leader Capital Markets has initiated coverage of Rafa Laboratories stock with a "buy" recommendation and a price target of 24 NIS per share. This target price is approximately 45% higher than the current market price of 16.5 NIS, with the company's market capitalization standing at roughly 1.677 billion NIS.
Financial Projections and Valuation
Analyst Sabina Levy noted in the report that Rafa is trading at a price-to-earnings (P/E) multiple of about 13 based on its 2026 earnings forecast, and a multiple of roughly 10 based on its 2027 earnings forecast. Leader estimates that the current valuation does not fully reflect the company's growth potential and the expected improvement in its financial results over the coming years.
Established in 1937, Rafa is considered one of the five largest pharmaceutical companies in Israel, employing approximately 260 people. In 2020, the company was acquired by the FIMI Opportunity Funds, which currently holds about 52.9% of its shares, alongside the Levin family and public shareholders. The company operates a manufacturing facility in Har Hotzvim, Jerusalem, and benefits from an effective tax rate of about 10% under the Law for the Encouragement of Capital Investments.
Pharma Core and Biodefense Expansion
The pharmaceutical business serves as one of the company's primary growth engines. In 2025, sector revenues reached 262.8 million NIS, accounting for 63% of Rafa's total revenues. The activity encompasses more than 100 products across eight therapeutic areas, alongside partnerships and exclusive representation of international pharma companies. Concurrently, the company is advancing the launch of more than ten new products, which are projected to reach cumulative annual sales of 150 to 250 million NIS within four years.
Rafa also maintains significant activity in the biodefense sector, focusing on the development and manufacturing of automatic injectors for use in emergency situations, trauma, and unconventional threats. The company collaborates with governmental bodies and the Israeli defense establishment, and as part of the TXA project, it is developing an automatic injector to halt severe bleeding in partnership with the U.S. BARDA agency. The project includes potential funding of up to 186 million dollars.
Expected Financial Growth
According to Leader's forecast, Rafa's revenues are expected to rise from 418.4 million NIS in 2025 to 475.2 million NIS in 2026, 558.3 million NIS in 2027, and 656.1 million NIS in 2028. Simultaneously, net income is projected to grow from 100.3 million NIS in 2025 to 124 million NIS in 2026, 158.7 million NIS in 2027, and 203.9 million NIS in 2028.
Profitability is also slated to improve. Operating income, which stood at 111.7 million NIS in 2025, is expected to reach 137.5 million NIS in 2026 and 216.5 million NIS in 2028. EBITDA is projected to climb from 126.7 million NIS to 230.9 million NIS over the same period.
Leader noted that a significant portion of the profitability enhancement is expected to stem from the expansion of biodefense operations, which are characterized by higher profit margins. Furthermore, the forecasts presented in the report do not incorporate potential upside from early product approvals currently in development or future strategic acquisitions.
Rafa also holds a 40% stake in ExCEEd Orphan, a Czech company that markets orphan drugs across 17 European countries. Rafa holds options to increase its stake to 60% in 2027 and to full ownership by 2028. Such a move could lead to the consolidation of the company's results and a substantial transformation in Rafa's reported revenue scale.
