Lonza - Growth Comes at a Cost (HOLD, TP CHF660 [700], 6 pgs)
Following our recent downgrade (click here), we viewed our above consensus forecasts as being a fair reflection of Lonza’s outlook. Yesterday’s CMD has resulted in us barely changing our sales and EBITDA forecasts, but our CAPEX forecasts have increased by 40% in 2024 & 80% in 2026. The rapid sales and EBITDA growth that we forecast, requires ongoing CAPEX expansion given the business is clearly running at close to full capacity. We question whether near-term ROIC’s may fall as CAPEX ramps up to support new capacity build-outs. COVID may turn into a headwind by 2023 in our view & we have some concerns around M&A although this appears to be relatively low on mgmt’s list of priorities.For access to the full note and our recent downgrade, 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.
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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We provide debt research on:
- Pan European Telecom Services and Cable
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