CDMO - Long Lonza, Short Stedim (LONN: BUY, TP CHF500 [465]; DIM: SELL, TP EUR165, 14 pgs)
With multiple datapoints, management commentary and peer reporting, we now have a better picture of the H124 outlook and more importantly of how the shares may trade. Whilst company commentary is cautiously optimistic on an H2 revenue recovery, the bottoming of order books and modest growth in sequential sales has led to the market becoming increasingly positive on the Life Science Tools space and CDMO’s. While we believe the risks are still significant, we believe the margin risk is now more material than revenues but is being overlooked by the market. We increase our Lonza PT to CHF500 (BUY) & retain our SELL on DIM FP based on optimistic margin guidance and a very real rights issue risk.For access to the full note, please contact Naresh Chouhan ( )
Lonza supplies services and products that range from active pharmaceutical ingredients and stem-cell therapies to drinking water sanitizers, from vitamin B compounds and organic personal care ingredients to agricultural products, and from industrial preservatives to microbial control solutions. Co. operates in two segments: Lonza Pharma & Biotech, which clusters all of Co.'s offerings for pharmaceutical markets, focuses on providing custom development, custom manufacturing, cell therapy, viral therapeutics and bioscience solutions; and Lonza Specialty Ingredients, which includes offerings in its consumer care, agro ingredients, industrial solutions, wood protection and water treatment.
Sartorius Stedim Biotech is a provider of equipment and services for the development, quality assurance and production processes of the biopharmaceutical industry. Co.'s solutions cover fermentation, filtration, purification, fluid management and lab technologies and membrane chromatography, including various conventional lab products to biopharmaceutical laboratories. Co.'s technologies, products and services are used to develop and manufacture medications and vaccines using biological methods. Co.'s products covers all upstream and downstream steps in the production of active pharmaceutical ingredients. It specializes in single-use products and offers technical consulting and services.
Provided by our team of experienced analysts, our work is idea driven, based on independence of thought, sector expertise, and firmly focussed on fundamentals and valuation.
New Street Research is an independent, partner-owned, research firm specialising in equity and debt research. Our equity research embraces the following sectors:
- Pan European Telecom Services and Cable
- US Telecoms, Cable, Satellite and Towers
- Global Emerging Market Telecoms
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- Pan European Healthcare
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- Pan European Telecom Services and Cable
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