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ROVI: 3Q’20 RESULTS AND T.P. UPGRADE (ANÁLISIS BANCO SABADELL)

3Q'20 vs. 3Q'19 Results
Sales: € 111.0 M (+18.0% vs. +15.9% BS(e) and +7.3% consensus);
EBITDA: € 27.3 M (+30.0% vs. +30.6% BS(e) and -2.9% consensus);
EBIT: € 22.4 M (+36.6% vs. +37.7% BS(e) and 0.0% consensus);
Net Profit: € 17.2 M (+18.6% vs. +25.8% BS(e) and -9.0% consensus);
9M'20 vs. 9M'19 Results
Sales: € 302.1 M (+11.2% vs. +10.5% BS(e) and +7.5% consensus);
EBITDA: € 69.7 M (+46.7% vs. +47.0% BS(e) and +32.2% consensus);
EBIT: € 55.3 M (+62.2% vs. +62.7% BS(e) and +44.6% consensus);
Net Profit: € 46.8 M (+52.4% vs. +55.9% BS(e) and +39.4% consensus);
The 3Q’20 results came in better than expected by the consensus and in line with our estimates. The 2021 guidance came in slightly below expectations. The quarter’s EBITDA totalled € 27.3 M, in line with our estimates (€ 27.4 M) and above those of the consensus (€ 20.4 M), thanks to higher EBITDA margins than expected (24.6% vs. 25% BS(e) and 20.2% consensus) and better sales figures (+18% vs. +16% BS(e) and +7.3% consensus). In this regard, we highlight the good performance of its third-party manufacturing business, which grew by +48% (thanks to the seasonal flu vaccination campaign) and the swift recovery of its heparin franchise (~50% of sales; +10% vs. 2Q’20). Net Profit also came in above expectations (€ 17.2 M vs. € 13.2 M consensus and vs. € 18.2 M BS(e)) despite the increase in the effective tax rate from 9.9% as of the 1H’20 to 19.6% this quarter. Net debt remained stable at € 38 M (BS(e) in line), whereas debt levels remained low (~0x NFD/EBITDA).
The company reiterates its guidance’20 of mid single-digit growth in operating revenues (vs. +6% BS(e) and consensus), although it raises its guidance for the third-party manufacturing business to growth in the low twenties (vs. +12% BS(e)). It provides, for the first time, a guidance of mid single-digit growth in operating revenues’21 , without taking into account the potential impact from Moderna’s vaccine, which stands below our estimates and those of the consensus (+16%), although we believe that performance as of YE2020 will be far above the consensus estimates (+6% in sales vs. +12% as of 9M’20).
In short, the 3Q’20 results came in strong and above expectations, which might lead to a positive share price reaction despite a more conservative guidance’21 than expected and the stock’s recent good performance (+12% vs. IBEX since the 2Q’20 results). With this in mind, we raise our estimates for 2020-23 (+1.2% in sales and +13% in EBITDA) and, with the roll-over of our model, we obtain a new T.P. of € 29.50/sh. (-6.6% potential), meaning a €+4.50 rise (+18% vs. previous). Despite this improvement, in our view the current share price factors in the a brilliant business outlook, and following its recent good performance (+30% in 2020 and +59% vs. IBEX), our new T.P. yields no upside, and thus, we maintain our SELL recommendation. As usual, there will be no conference call, but we expect to learn further details on the company’s strategy and business performance on the upcoming Investor Day to be held on 24 November. SELL. Target Price: € 25.00/sh (upside -20.89%)