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ALK-Abello (Buy, TP: DKK140.00) - Q3 rebound was not a one-off

While the Q4 results were fairly in line, sales growth for the important European tablets was stronger than expected, showing the rebound in Q3 was not a one-off. In addition, the 2024 guidance notably suggests organic growth returning to >10% and still-strong margin expansion, while the CMD in Q2 is likely to reconfirm the 2025 EBIT margin target. We reiterate our BUY and have raised our target price to DKK140 (127).
European tablet momentum still strong. Q4 organic growth of c10% was largely in line with expectations (consensus 9.7%), with the 14.4% EBIT margin slightly shy of estimates (consensus 14.8%), albeit the gross-margin expanded in line with expectations. More importantly, key European tablet sales growth of c12% YOY (13% in H2) was stronger than expected (consensus c9%). We believe this shows the rebound in Q3 was not a one-off and that momentum is greater than expected; the company expects this momentum to continue in 2024, driven by an increased inflow of new patients in the recent initiation season (we estimate c15%).
2024 guidance provides relief. Supported by the strong rebound in European tablet sales, ALK guided for 2024 organic growth of 9–12% (consensus 10.4%), which we believe could prove conservative but importantly suggests a return to >10%. It also guided for the EBIT margin to increase from c14% in 2023 to 17–19% (consensus 18.7%), which together with top-line expectations should drive >40% EBIT growth in 2024.
ESTIMATECHANGES(DKKm),(DKK)Year-endDec2024e2025e2026eSales(old)5,3365,921Sales(new)5,3495,9386,683Change(%)0.20.3nmEPSadj(old)3.775.26EPSadj(new)3.905.506.84Change(%) 3.44.5nmSource:DNBMarkets,CompanyconsensusESTIMATECHANGES(DKKm),(DKK)Year-endDec2024e2025e2026eSales(old)5,3365,921Sales(new)5,3495,9386,683Change(%)0.20.3nmEPSadj(old)3.775.26EPSadj(new)3.905.506.84Change(%) 3.44.5nmSource:DNBMarkets,CompanyconsensusResults from strategic review to be presented at Q2 CMD. ALK also announced it is carrying out a strategic review and will share the results at a CMD in Q2. Regarding market concerns of lower margin guidance for 2025, the company reiterated its 25% EBIT-margin target for 2025 (consensus c23%), with the strategic review expected to identify relevant business optimisations and cost-savings in support of its EBIT targets.
ESTIMATE
CHANGES
(DKKm),
(DKK)
Year-end
Dec
2024e
2025e
2026e
Sales
(old)
5,336
5,921
Sales
(new)
5,349
5,938
6,683
Change
(%)
0.2
0.3
nm
EPS
adj
(old)
3.77
5.26
EPS
adj
(new)
3.90
5.50
6.84
Change
(%)
3.4
4.5
nm
Source:
DNB
Markets,
Company
consensus
ESTIMATE
CHANGES
(DKKm),
(DKK)
Year-end
Dec
2024e
2025e
2026e
Sales
(old)
5,336
5,921
Sales
(new)
5,349
5,938
6,683
Change
(%)
0.2
0.3
nm
EPS
adj
(old)
3.77
5.26
EPS
adj
(new)
3.90
5.50
6.84
Change
(%)
3.4
4.5
nm
Source:
DNB
Markets,
Company
consensus
BUY reiterated and target price increased to DKK140, which corresponds to c20x P/E on our 2026e or 3-year PEG of 0.50 on conservative margin estimates. We thus still find the valuation attractive, given its >10% sales growth profile is restored.