Controversy has often opened an opportunity for keen investors to snap up stock at an outstanding price. Global leader in dependency care, the ORPEA Group, had been safely riding on what can predominantly be called a sideways trend for well over five years, but abuse has broken the bubble. Shares steadily rose to touch an all-time high of 122.40 EUR on Valentine’s Day, 2020, and had tethered around the tally until the recent”Gravediggers’ scandal concerning the mistreatment of the elderly in French nursing homes and clinics unsurfaced in a book on January 24th.
Scandal Casts ORP Into Gravely Deep Spiral
Orpea SA plummeted from a 52-week high of 111.11 EUR to just 38.21 by February 17th, 2022, after the French government began investigations into its nursing homes and clinics. An author and journalist by the name of Victor Castanet detailed the results of three years of investigations into the Orpea Group’s nursing homes and clinics in his book entitled ‘Les Fossoyeurs,’ which translates to ‘The Gravediggers’. The account published in January covers dire revelations of senior citizens’ abuse, terribly treated staff, dodgy financial accounting practices, and many more heinous crimes, with over 250 shocking testimonials included.
The Gravedigger Scandal And Orpea
Immediate measures were taken to reform the company, including sacking the CEO Yves Le Masne on the Sunday following the news of the alleged mistreatment. After all, the allegations are as grave as leaving the elderly with days without care and others left for hours wearing soiled underwear to rationing out unfairly limited portions of food across over 250 French homes. Yet, no direct action could stop ORP from cruising down a steep spiral that hasn’t ended for over three weeks.
Nursing Homes Under The Lens Of French Government
One has to factor in the French Government’s Recent focus on upgrading nursing homes throughout the country as a motivator for potential investment. Just last year, 2.1 billion euros were allocated to the nursing home budget. Once the investigations into Orpea and the immediate pressure on its Korean SA and LNA Sante SA conclude and ease up, the private for-profit nursing homes industry will be set up with better inspections, tighter regulations, and a greater level of transparency. Nursing home titans like Orpea with 2.468B market capitalization will have no choice but to comply, and that means that recovery is just a matter of time.
BlackRock Invests Heavily In ORP
Another strong sign for many investors to snap up stock is the world’s largest asset manager, BlackRock, increasing its share of Orpea to 5.27% stock and 4.39% voting rights. That’s a massive move considering the almost innumerable number of clients that BlackRock is investing for. Analyst price targets have set a low of 43 and a high of 155, with an average price objective of 76.75 arising across eleven scores for Orpea stock. If ORP manages to reach the median, it’ll be at double its current value by the end of the year or sooner. With the scandal totally in the light and Orpea’s full focus on the proper treatment of residents, patients, families, and staff, we feel that a strong rebound is likely.
Minor Immediate Gains But Mid To Long-Term Recovery Likely
Analysts are expecting the share price to continue dropping for the duration of the first quarter, but one has to consider the massive pressure that’s on the company given the government involvement, the industry’s economic focus in France, and the global spotlight that’s currently on Orpea. It has barely been a month since the scarring allegations, and Orpea stock has already begun to show signs of recovery with gains of 1.91% in a single trading session to start off the last week of February, all while the Paris CAC 40 was falling in the majority. Investors timing a lucrative entry point may only have a short while left before the ORPEA Group regains trust and stock value starts to grow.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only