Why May & Baker Is Emerging as a Quiet Healthcare Winner in 2026
With the Nigerian Exchange (NGX) already up 4.9% in early 2026 and market capitalisation holding firmly above ₦100 trillion, investor optimism is proving stronger than many expected. Several stocks previously identified for upside are already responding, and May & Baker Nigeria Plc is one of the names drawing renewed attention.
Market Context: Momentum Is Carrying into 2026
• The NGX delivered a 51.2% return in 2025, powered by standout performers such as NCR Nigeria and Eunisell.
• Risk appetite remains healthy in 2026, especially for companies with clear earnings growth and durable fundamentals.
• Healthcare stocks, while not the biggest gainers overall, are quietly gaining investor interest.
May & Baker’s 2025 Performance in Perspective
• May & Baker returned 102% in 2025—solid, though less dramatic than:
• Fidson Healthcare: +223%
• Neimeth Pharmaceuticals: +153%
Despite lagging peers on headline performance, May & Baker’s underlying financials are stronger and more consistent, setting the stage for a re-rating.
Strong Start to 2026 Signals Renewed Interest
• In the first eight trading days of 2026, the stock surged 67%, rising from ₦19 to ₦31.65 by January 12.
• This rally reflects growing investor confidence backed by:
• Improving earnings quality
• Stronger margins
• Still-attractive valuation metrics
Earnings Growth That Stands Out
For the nine months ended September 2025:
• Net profit: ₦3.3 billion (+77% YoY)
• Net profit margin: 11.3% — the highest among listed healthcare peers
• Nine-month profit already exceeded full-year 2024 earnings, pointing to a much stronger FY-2025 outcome.
This highlights superior cost control, pricing power, and operational efficiency.
Core Pharmaceuticals Drive Quality Revenue
• Pharmaceuticals contributed over 98% of total revenue and profit.
• Beverage operations remain marginal, reducing earnings volatility.
• Strength lies in branded generics and contract manufacturing, segments known for more stable margins.
A key advantage is May & Baker’s paracetamol brand, instantly recognisable by its red packaging and now enjoying stronger dominance following GSK’s Panadol exit from Nigeria.
Balance Sheet Shows Growing Strength
• Total assets: ₦25.8bn (up from ₦22.5bn in FY-2024)
• Cash & equivalents: ₦5.4bn (FY-2024: ₦3.2bn)
• Retained earnings: ₦8.26bn
• Operating cash flow: ₦1.87bn
While borrowings increased, stronger earnings and cash flows helped absorb the impact—crucial in a high-interest-rate environment.
Valuation Still Looks Reasonable
Despite the recent price rally:
• P/E ratio: ~14.6x (discount to most healthcare peers)
• Price-to-book: 3.88x
• Return on average assets: 13.9%, the highest in the sector for the period
This suggests the stock is not yet overpriced, even after its strong early-year move.
Dividend Outlook: A Growing Story
• 2025 dividend yield stood at ~3%
• A potential ₦1 dividend per share would represent a 150% increase over the 40 kobo paid for 2024
• Signals improving capacity for stronger shareholder returns over time
Investor Takeaway
May & Baker’s recent rally appears less like speculative excitement and more like the early phase of a valuation re-rating driven by:
• Strong earnings growth
• Market-leading margins
• Solid balance sheet
• Undemanding valuation
In a market increasingly focused on earnings durability rather than hype, May & Baker is shaping up as a healthcare stock investors may want to keep firmly on their 2026 watchlist.
SOURCE: Business Day Analysis
With the Nigerian Exchange (NGX) already up 4.9% in early 2026 and market capitalisation holding firmly above ₦100 trillion, investor optimism is proving stronger than many expected. Several stocks previously identified for upside are already responding, and May & Baker Nigeria Plc is one of the names drawing renewed attention.
Market Context: Momentum Is Carrying into 2026
• The NGX delivered a 51.2% return in 2025, powered by standout performers such as NCR Nigeria and Eunisell.
• Risk appetite remains healthy in 2026, especially for companies with clear earnings growth and durable fundamentals.
• Healthcare stocks, while not the biggest gainers overall, are quietly gaining investor interest.
May & Baker’s 2025 Performance in Perspective
• May & Baker returned 102% in 2025—solid, though less dramatic than:
• Fidson Healthcare: +223%
• Neimeth Pharmaceuticals: +153%
Despite lagging peers on headline performance, May & Baker’s underlying financials are stronger and more consistent, setting the stage for a re-rating.
Strong Start to 2026 Signals Renewed Interest
• In the first eight trading days of 2026, the stock surged 67%, rising from ₦19 to ₦31.65 by January 12.
• This rally reflects growing investor confidence backed by:
• Improving earnings quality
• Stronger margins
• Still-attractive valuation metrics
Earnings Growth That Stands Out
For the nine months ended September 2025:
• Net profit: ₦3.3 billion (+77% YoY)
• Net profit margin: 11.3% — the highest among listed healthcare peers
• Nine-month profit already exceeded full-year 2024 earnings, pointing to a much stronger FY-2025 outcome.
This highlights superior cost control, pricing power, and operational efficiency.
Core Pharmaceuticals Drive Quality Revenue
• Pharmaceuticals contributed over 98% of total revenue and profit.
• Beverage operations remain marginal, reducing earnings volatility.
• Strength lies in branded generics and contract manufacturing, segments known for more stable margins.
A key advantage is May & Baker’s paracetamol brand, instantly recognisable by its red packaging and now enjoying stronger dominance following GSK’s Panadol exit from Nigeria.
Balance Sheet Shows Growing Strength
• Total assets: ₦25.8bn (up from ₦22.5bn in FY-2024)
• Cash & equivalents: ₦5.4bn (FY-2024: ₦3.2bn)
• Retained earnings: ₦8.26bn
• Operating cash flow: ₦1.87bn
While borrowings increased, stronger earnings and cash flows helped absorb the impact—crucial in a high-interest-rate environment.
Valuation Still Looks Reasonable
Despite the recent price rally:
• P/E ratio: ~14.6x (discount to most healthcare peers)
• Price-to-book: 3.88x
• Return on average assets: 13.9%, the highest in the sector for the period
This suggests the stock is not yet overpriced, even after its strong early-year move.
Dividend Outlook: A Growing Story
• 2025 dividend yield stood at ~3%
• A potential ₦1 dividend per share would represent a 150% increase over the 40 kobo paid for 2024
• Signals improving capacity for stronger shareholder returns over time
Investor Takeaway
May & Baker’s recent rally appears less like speculative excitement and more like the early phase of a valuation re-rating driven by:
• Strong earnings growth
• Market-leading margins
• Solid balance sheet
• Undemanding valuation
In a market increasingly focused on earnings durability rather than hype, May & Baker is shaping up as a healthcare stock investors may want to keep firmly on their 2026 watchlist.
SOURCE: Business Day Analysis