Lonza - Most Attractive CDMO/Tools Name (BUY [HOLD], TP CHF650 [550])
Today’s CMD sets out a clear strategy for the next decade, creating a streamlined & more focused Lonza. The Capsules & Health Ingredients (CHI) business will go, leaving behind a pure-play BioPharma CDMO with 14% sales and 18% EBITDA CAGR 24-29, on our numbers. Our downgrade in Sept was predicated on higher near to mid-term risks to forecasts. With 2025 forecasts now underpinned, cost efficiencies & greater clarity on the shape of the sales growth to 2028, we now believe Lonza is the most attractive name in the CDMO/Tools space. An EV/EBITDA (ex-CHI) of 20x next year looks good value. Our new TP of implies Lonza trades on 24x 2025 EBITDA (ex-CHI) for a low risk 18% EBITDA CAGR. BUY.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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