Investing.com -- Grifols shares slipped after Morgan Stanley downgraded the Spanish healthcare group, citing weaker visibility on medium-term revenue growth and headwinds in key product segments.

Morgan Stanley cut its rating on the stock to Equal-weight from Overweight and lowered its price target to €11 from €14, saying the outlook for revenue growth has become less certain despite solid profitability trends.

Grifols shares slid 1.6% in U.S. premarket trading by 06:12 ET.

The downgrade follows the company’s fiscal 2025 results and reflects reduced expectations for growth in the coming years. The bank now forecasts revenue growth of around 3% in constant currency for 2026 and adjusted EBITDA of €1.93 billion, representing roughly 8% growth.

Analysts pointed to pressure in the albumin business, particularly in China, as a key factor weighing on growth prospects. The China albumin market has been affected since mid-2025 by government restrictions on hospital reimbursement, which have led to weaker demand and pricing pressure.

“We expect the headwinds on albumin in China to persist in H1’26 with limited scope for recovery beyond,” the analysts led by Thibault Boutherin wrote, adding that the outlook for alpha-1 proteins also remains uncertain.

They noted that management is prioritizing profitability over volume growth, which will likely slow top-line expansion in the near term. According to the analysts, the expected “moderate” revenue growth in 2026 partly reflects a voluntary slowdown in immunoglobulin volume growth as the company reallocates supply to higher-value markets.

“A decline of albumin sales in China and the slowdown of alpha-1 are leading Grifols to limit IG volume growth in 2026 to protect margins,” the analysts said.

While Morgan Stanley highlighted strong EBITDA and free cash flow trends — including expectations for free cash flow of €500–€575 million in 2026 driven by margin expansion — it cautioned that relying on margin improvements alone may not sustain long-term growth.

Additional uncertainty also comes from potential competition in the alpha-1 therapy market. Analysts said the possible filing of Sanofi’s recombinant alpha-1 therapy remains “a key binary risk” for the franchise.

At the same time, the company’s valuation remains relatively attractive, the analysts noted, with the stock trading at around nine times next-twelve-month EV/EBITDA. However, they said the combination of revenue growth uncertainty and competitive risks justifies a more neutral stance on the shares.