On the right track

Mixed results in Q3

Improved sales growth in Q3e

Vitrolife (Buy, TP: SEK280.00) - Underlying trends set to continue

Vitrolife stock has recovered nicely since its Q2 report (up c33% since the day before the report). We believe most of the Q2 trends that triggered the revaluation of Vitrolife remain, heading into the Q3 results. For the quarter, we are c1% below consensus on sales and c4% below on adj. EBITDA. We have increased our forecasts from 2025 and our target price to SEK280 (250). We reiterate our BUY.

Technology business shines in Q2

Higher sales and gross margin in Q2. EBITDA revised up 2.2%-3.3% for '24e-'26e. Valuation below historical multiples, but above sector peers.

Vitrolife (Buy, TP: SEK250.00) - Solid beat in Q2

A 3% beat in sales versus consensus was led by Technologies, while a stronger group gross margin (c270bp above our forecast and consensus) fuelled the 10% adj. EBITDA outperformance. Following the results, we have raised our 2024–2026e EPS by 8–10% and our target price to SEK250 (210); we reiterate our BUY.

Earnings beat on higher sales and gross margin

Still waiting for growth to return in Genetics

Q2'24 results due 17 July. We expect flat organic sales growth but improving margins in Q2. EBITDA '24e-'26e down +1.0-1.5%.

Vitrolife (Buy, TP: SEK210.00) - Market will likely focus on Genetics

We believe the market will continue to focus on trends in Genetics, as this segment has the most challenges. It will likely be hit by lower sales of kits (in line with consensus). However, the underlying advances in Genetics show some signs of stabilisation. Our impression is that Consumables and Technologies continue to grow as expected. We reiterate our BUY and SEK210 target price.

Vitrolife (Buy, TP: SEK210.00) - Soft start to the year

Q1 earnings were softer than expected, with sales and adj. EBITDA c3% below consensus, despite the downward revisions to consensus ahead of the results. Genetics was positively affected by stocking effects in H1 2023, making for challenging comparables in Q2 as well. However, we see potential for a turnaround in Genetics in Q3. We reiterate our BUY, but have cut our target price to SEK210 (230) on revised forecasts.

Vitrolife (Buy, TP: SEK230.00) - Set for a soft start to 2024

We expect Vitrolife to report a relatively soft start to 2024 (Q1 results due at 08:00 CET on 18 April). We believe Consumables and Technology continued to perform well, but that the turnaround in Genetic Services failed to materialise (with tough comparables due to the loss of some US contracts in the US late in Q1 as well as strong sales of genetic kits in Q1–Q2 last year due to stocking, which we expect to normalise this year). We are in line with consensus on 2024e adj. EBITDA but just below...

Vitrolife (Buy, TP: SEK230.00) - No drama in pre-announced Q4

We see no drama in the Q4 report, as the earnings were pre-announced (23 January), at which time Vitrolife also announced a non-cash write-down of SEK4.3bn in goodwill related to the Igenomix acquisition. Overall, the company sounds optimistic for the coming years and stated that the growth ambition is above the overall market growth. We reiterate our BUY and have raised our target price to SEK230 (220).

Vitrolife (Buy, TP: SEK220.00) - Goodwill writedown likely in Q4e

We forecast Q4 earnings below consensus and expect Vitrolife to announce a goodwill writedown of cSEK3bn. We initially expected this in Q4 2022; however, with higher interest rates and poor performance in Genetic Services during the year, we believe a writedown is more likely in Q4. We reiterate our BUY, but have cut our target price to SEK220 (250) on our reduced forecasts.

Vitrolife (Buy, TP: SEK250.00) - Mixed report

The Q3 report was mixed, with sales and the gross margin weaker than expected but the EBITDA margin stronger due to cost-saving initiatives. The sales miss was due to weakness in Genetic Services and Consumables, while Technology was stronger than expected. We expect improved sales in Genetic Services within a few quarters, and other areas to be stronger short-term. We reiterate our BUY but have cut our target price to SEK250 (280).

Vitrolife (Buy, TP: SEK280.00) - Minor estimate revisions

We have made only minor estimate changes ahead of the Q3 results due at 08:00 CET on 27 October. We expect good underlying growth for Consumables and Technology, but Genetic Services to be still hampered mainly by the ongoing decline in ERA testing. We are slightly below consensus for Q3e, but in line for 2023e. We reiterate our BUY and SEK280 target price.

Northern Lights

Vitrolife (Buy, TP: SEK280.00) - Q2 softer than expected

Vitrolife reported weaker than expected Q2 earnings. Sales were c4% below our forecast and adj. EBITDA was c5% below our forecast. Consumables were very strong, while revenues for Technologies and Genetic services fell short. The share price slumped on the day, but we consider this somewhat of an overreaction. We reiterate our BUY but have cut our target price to SEK280 (320) on lowered forecasts.

Northern Lights

Vitrolife (Buy, TP: SEK320.00) - Q2e largely in line with consensus

We are broadly in line with consensus on Q2e, estimating a slightly higher top line but lower margins, as we expect higher costs due to salary inflation from Q2. Overall, we believe the near-term outlook is strong, as the fact that China’s Year of the Dragon starts on 10 February 2024 should boost H2e sales. We reiterate our BUY but have cut our target price to SEK320 (340) on forecast revisions.

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