Investec has initiated coverage of healthcare services provide United Drug with a 'sell' rating and 240p target price, labelling the group's recent share price rise as 'artificial'.

"United Drug has pursued a strategy of diversification through acquisition, using cash generated from its Irish wholesale business unit to move up the value chain," the broker said.

"However, for us, many of the acquisitions have brought with them a new set of risks and we fail to see a strong cohesive link between them."

As such, Investec believes that the company's lacks defensive properties to protect against competition as there is "little to pull or push customers through its business model".

The broker concluded: "United Drug's share price has risen by c.60% since it announced its intention to seek a sole Premium Listing in the UK. We think this news, and not business fundamentals, has artificially driven up the share price."

BC

Related share prices
United Drug (UDG) share price