The restructuring and upmarket strategy has still not convinced investors. Despite a marked increase in capital intensity, growth remains weaker than hoped for and margin compression is very real.

In this respect, EPS has been stagnant for five years, despite a one-third increase in revenue over the period, from €1.5bn to €2bn. Even more critical is that investments have not been covered by operating cash flows for four years, and net debt has doubled.

Investors have therefore lost patience and the group's market capitalization has been halved. In terms of multiples, it has fallen from 10x to 7x EBITDA, i.e., a multiple of operating profit before investments that is significantly lower than that of its rivals Schott and Stevanato, both of which have much stronger financial operating performances.

These difficulties have also whetted the appetite of private equity funds. Earlier this year, a consortium comprising KKR, EQT and Warburg Pincus was considering a privatization. KKR has since withdrawn, replaced by KPS Capital Partners. In June, two activist funds also appeared on the capital scene.

Against this backdrop, H1 results do not yet suggest a turnaround. However, management promises that the worst is now behind them, that the intensive investment program is coming to an end, and that free cash flow will be positive again next year. A spin-off of the molded glass division is also being considered.

Fans of this type of stock who would like to bet on a turnaround at Gerresheimer will no doubt be reassured by the fact that several investment funds are covering them on the downside.

https://www.marketscreener.com/quote/stock/GERRESHEIMER-AG-599546/news/While-Gerresheimer-struggles-rumors-of-privatization-intensify-50489115/