(Bloomberg) -- Spanish drugmaker Grifols SA is poised for its worst year on record, but some analysts aren’t ready yet to give up on a stock that’s been a favorite target of short sellers.

The shares have plummeted almost 40% so far in 2024 and they’re the most-shorted in the Stoxx 600 Health Care Index, clouded by concerns about the company’s debt burden and strategy after a failed take-private deal.

Even so, it’s becoming harder to ignore just how cheap the shares have become, and more than two-thirds of analysts tracked by Bloomberg still have a buy recommendation or equivalent for the company.

“It has been a horrible year for the shares, which could have jeopardized the company’s continuity,” Patricia Cifuentes, an analyst at Bestinver Securities, said in an interview. “There has been a lot of noise, but operationally, the company has delivered on the targets set.”

Grifols declined to comment on this year’s share-price decline and elevated short interest.

The year’s woes began in January when short seller Gotham City Research published a report criticizing the drugmaker’s corporate governance and financial accounts. Spain’s regulator said more than eight months later it would fine the firm for sharing “misleading” information in various financial reports. The regulator has also opened disciplinary proceedings against Gotham for alleged market manipulation.

Since the Gotham report, Grifols has been taking steps to quell investor concerns. Nacho Abia took over as chief executive officer in April, following the board’s decision to remove all family members from executive positions. And just this week, Grifols raised €1.3 billion ($1.4 billion) in a private debt placement, in an attempt to reassure investors that the company can control its leverage ratios and focus on cash generation.

For Bank of America analyst Graham Parry, Grifols’ underlying recovery is “undervalued,” while the Spanish regulator’s investigation noting no major accounting issues suggests “further issues are unlikely.” As the company’s sales and earnings recover, “we expect cashflow to follow,” he said in a note. 

Grifols is trading at about 11 times expected earnings, which is roughly 30% below the Stoxx 600 Health Care Index. 

Analysts are broadly optimistic on the company. Among those tracked by Bloomberg, 13 have a buy rating or equivalent, 4 recommend holding the stock and 2 say sell. Twelve-month price targets compiled by Bloomberg suggest analysts see the stock rising more than 60% on average from current levels.

Still, not everyone is convinced on Grifols’ prospects. Shares out on loan — an indication of short interest — represent about 13% of the company’s free float, according to latest data from S&P Global Market Intelligence.

Calls are also mounting for a board overhaul, with minority shareholders increasingly criticizing how the company — which is 35% owned by Spain’s billionaire Grifols family — is being run.

“The company’s problems are not completely over: the interest burden remains high, and, in our view, further financial restructuring is needed,” Juan Ros-Padilla, an analyst at Oddo BHF, said in a note. “Further action is needed on the corporate governance front.”

Grifols had already faced governance and transparency concerns even before the Gotham report in January, but some investors had overlooked those issues because the company is one of only a handful of firms that dominate the global business of collecting blood plasma and turning it into treatments for diseases such as hepatitis and hemophilia.

The stock was given some respite on the news that Brookfield Asset Management was looking to take the Spanish company private in partnership with the Grifols family. But the New York-based money manager walked away from the deal last month, with the family saying it won’t back another take-private transaction.

“The price will take time to recover,” Bankinter SA analyst Pedro Echeguren wrote in a note.

--With assistance from Clara Hernanz Lizarraga.

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