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ROVI: 4Q’20 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'20 vs. 4Q'19 Results
Sales: € 117.9 M (+7.5% vs. +8.6% expected and +12.7% expected by the market consensus);
EBITDA: € 24.5 M (+82.8% vs. +100.5% expected and +90.3% expected by the market consensus);
EBIT: € 19.4 M (+128.2% vs. +158.0% expected and +129.4% expected by the market consensus);
Net Profit: € 14.3 M (+66.3% vs. +93.7% expected and +94.2% expected by the market consensus);
FY2020 vs. FY2019 Results
Sales: € 420.0 M (+10.1% vs. +10.0% expected and +9.0% expected by the market consensus);
EBITDA: € 94.2 M (+54.7% vs. +58.8% expected and +45.0% expected by the market consensus);
EBIT: € 74.7 M (+75.4% vs. +81.7% expected and +61.5% expected by the market consensus);
Net Profit: € 61.1 M (+55.5% vs. +64.1% expected and +51.4% expected by the market consensus);

4Q’20 Results beat the consensus estimates. The company announced a new 2021 guidance, including Moderna’s vaccine. The 4Q EBITDA reached € 24.5 M, below our estimates (€ 27.0 M) although above the consensus (€ 18.6 M) thanks to sales (+6.7% vs. +6% BS(e) and +2.7% consensus) and margins (20.8% vs. 23% BS(e) and vs. 16.4% consensus). We stress the positive performance of its third-party manufacturing business that grew +40% (thanks to the greater reach of the flu vaccination campaign). Net Profit also beat consensus expectations (€ 14.2 M vs. € 17.7 M BS(e) and € 12.7 M consensus) despite the rise in the effective tax rate on the quarter to 16% vs. 6.2% in 2019 due to lower R&D investments. Good performance of NFD that fell by -48% to € 19.8 M (vs. € 22.6 M BS(e)), leaving the debt level practically at zero (~0x NFD/EBITDA vs. 0x in 3Q’20).
The company has raised its guidance’21 to between +20% and +30% growth in operating revenues (vs. growth in the mid teens previously), including (for the first time) the production of Moderna’s Covid-19 vaccine. This compares with +15% BS(e) excl. the agreement with Moderna and +18% consensus (we do not know whether it includes the aforementioned agreement or not). Assuming that Moderna contributed +15% growth in 2021, sales would total some € 62 M in 2021, meaning +32% vs. the € 47 M assumed in our valuation of the agreement with Moderna (€ 6.50/sh.; 18% of our T.P.), which assumes a contract duration of 5 years and peak sales totalling €~400 M in 2022), which are not included in our estimates. This would add some upside to our valuation of the deal, which in principle would not justify a change of recommendation (even if we assumed a valuation +35% above the agreement, our T.P. would stand at levels of € 38.00/sh. (vs. current trading levels of € 46.00/sh.)
Furthermore, the company has announced that it will propose a dividend’20 of € 0.3812/sh. (+118%; 0.8% yield), which is above expectations (€ 0.296/sh. BS(e) and € 0.254/sh. consensus) and means a 35% payout (vs. 30% BS(e)), in line with the historical level.
In short, the 4Q’20 results are robust and beat consensus estimates, and moreover are being warmly received (+2% vs. IBEX) despite the positive recent performance (+21% on the year; +20% vs. IBEX). There will be a conference call today at 15:00 (CET), and we expect more details on Covid-19 vaccine filling and packaging for Moderna, underlying business performance and a pipeline update. SELL. Target Price: € 36.00/sh. (-21.23% potential)