Vitrolife (Sell, TP: SEK165.00) - Strong Q3 – Covid-19 still looming
Vitrolife reported strong Q3 earnings, with sales beating our estimate by c8% and EBITDA beating our estimate by c33%. The gross margin reached c62.2%, 420bp above our 58% estimate. The higher than expected gross margin was a result of increased sales and a better mix (with more consumables versus capital equipment). However, even though the company’s situation seems to have stabilised, we are concerned a second wave of Covid-19 might hurt growth in Q4 and potentially Q1. We reiterate our SELL but have raised our target price to SEK165 (SEK150).Vitrolife AB is a Sweden-based company engaged in assisted reproduction services. The Company's product portfolio comprises G-RINSE, which is a solution for rinsing of contact materials, EmbryoGlue, which is a human albumin recombinant, ASP, which is a solution for oocyte retrieval and rinsing, and Semen VTS, which is a viscosity treatment system, among others. It also provides a range of procedural solutions for sperm preparation, vitrification, embryo transfer and oocyte retrieval, such as temperature control, condition control, gamete-safe labware and embryo support. The Company is active in Australia, China, France, Italy, Japan, the United States and the United Kingdom, among others, and conducts its business through a number of subsidiaries, such as Vitrolife Ltd., Vitrolife Pty Ltd., and A.T.S. Srl.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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