Goodbody Stockbrokers is recommending United Drug as a buy, raising its share price target from €8.75 to €10.50, indicating potential gains of up to 22 per cent on current levels.

It cautions that the tightly held nature of the company's share register and the ongoing rebalancing of the Irish component of portfolios by domestic fund managers could act as inhibiting factors. However, if United Drug is compared to its peer group of either European or US drug wholesalers, the logic for a re-rating is compelling.

With the potential for further acquisitions and strong results expected early next month, Goodbody believes there are catalysts to prompt price appreciation. It says any downside is protected by the potential of a bid, with the bigger European players in consolidation mode.