Lonza - Good Entry Point - (TP CHF 630, 9pgs)
We show that Lonza’s defensive growth profile with upside from Cell & Gene Therapy and M&A makes the recent pullback a potentially good entry point. Based on our bottom-up segment model we forecast 13% sales growth 2020-23, 19% EPS growth and margin growth ahead of company guidance. We show that the C> business alone adds 170bps to the group margin by 2023 and is the reason we are higher than company guidance. Based on new analysis on the C> business and CAPEX needs, we increase our valuation to CHF630, implying Lonza trades on 31x 2023 EPS.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.
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
- Japan Telecoms
- Asian Internet
- Pan European Healthcare
- Global healthcare thematic research
We provide debt research on:
- Pan European Telecom Services and Cable
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