Sartorius Stedim - Further De-rating Required (SELL, TP €165 )
Whilst the increasing order intake has been taken positively by the market, we believe 1) Implied Q423 sales are still a stretch & 2) the medium-term trend growth rate at Stedim will be significantly below historical levels & this warrants a considerable de-rating in our view. We believe M&A will be a materially smaller contributor to top-line growth, equipment sales (25% of total sales) growth will be lower for a number of years as CDMO’s & Pharma Co’s have built capacity & we believe new capacity is unlikely to be added at the same rate. Slower growth really matters. If the growth rate is slower, there is a risk the de-leveraging plan that drove the investment grade rating could be at risk which could lead to a rights issue.For access to the full note, please contact Naresh Chouhan ( )
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.
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