Lonza - Downgrade to HOLD (HOLD [BUY], PT CHF700 [630], 12 pgs)
Lonza shares are up 45% over the last 5 months yet 2022/23 EBITDA forecasts are up ~5% over this period. Whilst we believe the shares are now worth CHF700 [CHF630] due to lower CAPEX post 2026 and higher Cell & Gene profitability, we struggle to see how at the current price investors make money. We believe the supply chain risks are building and discussions we have had with industry insiders suggests that supplies into Biopharma generally are heavily disrupted with stockpiling further exacerbating the situation. Moreover, Lonza’s M&A track record is a concern for investors & post the LSI sale, M&A is imminent. Sanofi is our top pick in HC.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.
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