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The Q3 results were once again above our expectations (sales: +2.4%; adjusted EBITDA: +1.5%) as well as the consensus (sales: +1.6%; adjusted EBITDA: +1.5%). However some investors required more explanations so as to give the share price a strong intra-day reversal, which we have not see for quite a while.
The management provided the explanations required to understand all the moves in the reported figures and the fine-tuning of the guidance has not changed our positive view.
Companies: Merck KGaA
Merck reported another estimate-beating quarter. We hope investors will not be too upset when Merck’s performance no longer meets expectations. This might take quite a while as a second driver has joined Performance Solutions: Semiconductor Solutions. The latter seems to be able to stabilise its high growth rates. Healthcare lagged behind more than expected.
Our estimates were beaten by +5.5% at the top line and by +9.9% at the adjusted EBITDA level (consensus: +2.7% and +4.5%, respectively).
Merck’s figures were once again strong although they didn’t beat consensus by that much (sales: +0.3%; profitability: +0.4%). Our expectations had been a notch too high (sales -0.7%; profitability: -0.4%), which we do not see as meaningful as the miss at the profitability level mainly stemmed from too-high corporate costs.
Investors seemed to have an issue with the new detailed guidance, which left little room for consensus revisions. The lowered guidance for Covid-19-related sales might be a
Merck reported a good set of figures, but profitability did not fully match our very optimistic expectations (sales: 0.9%; adjusted EBITDA: -4.1%). Likewise for consensus (sales: +1.3%; adjusted EBITDA: -1.3%). It looks as if pharma was troubled by something temporary but nothing structural. Nevertheless, the company fully delivered towards its guidance.
The strong dividend proposal and the qualitative guidance make us quite optimistic for the current year.
This looks to be the new motto of Merck’s refurbished R&D pipeline. The strong cut in clinical programmes (50% up to 11/11/2021) has been quietly done. This reminds us of 2014/15, when Merck did something similar. This time, the trigger might have been the understanding that a drug candidate could not be developed in all and every suitable indication. This should be positive for the R&D spend.
We are not about to forget Process Solutions’ continued strong momentum, but Electronics has stepped quite impressively on the stage in recent quarters due to the roaring demand for chips from many industries. Healthcare was quite good, but suffered a bit from its Chinese business.
The lifted guidance confirmed our strong view on Merck. The next potential catalyst might be the update on Merck Healthcare’s R&D pipeline on 22/11/2021.
Merck’s investors day was impressive. The company’s management was very positive about the group’s future performance as a whole and by the developments of each division.
We had been very positive already in the past and there is no reason to change this. The different developments of the divisions is an advantage as we never believed in conglomerate discounts. However, besides all the enthusiasm, we remain cautious regarding Healthcare, where we need additional information to get a deeper und
We are still puzzled about Merck’s high-flying performance. The name has – again – outpaced our strong view, beating us at the top line (+4.5%; consensus: +2.2%) and at the EBITDA pre level (+10.5%; consensus: +7.7%). All three (!) divisions reported stronger than expected figures, driving profitability exceptionally high from low comparables. Sales stood at the highest watermark ever and EBITDA pre was only higher in Q3 20 (including a provision revision).
Nevertheless, these figures confirm
We have no doubts that the Q1 figures show the reality, which is impressive in Life Science! After the release of the preliminary figures, the only questions left were about the pattern and the momentum. HealthCare’s growth was a bit less pronounced and that of Electronics was subdued due to the still ongoing decline in Liquid Crystals.
Merck’s preliminary figures came in a bit out of the blue, but street expectations were too moderate (adjusted EBITDA: -15%). We were more positive, but our miss was still expected to be -12%. However, this underpins our strong view.
... and with sound optimism into 2021.
Merck’s Q4 figures fully confirmed our strong view on the share. All three divisions contributed to the development, according their respective strengths. Guidance and the higher dividend both support our thinking. Nevertheless, the pandemic will still have a negative impact here and there, if virus mutations invalidate the vaccination efforts. Consensus was met.
Merck’s Q3 figures confirmed our strong view by beating our expectations (+11% on EBITDA pre line) as well as consensus (+6% on EBITDA pre line). Stripping out the one-off in Healthcare, the organic performance was still very strong at the group level, driven by Life Science which was stronger than expected. However, Performance Materials did better organically, supported by the semiconductor business. Consequently, management added c.€400-600m including the one-off to EBITDA pre guidance.
Companies: MRK MRCK MKGAF MRK MRK MEK
Merck confirmed our positive view on the company. As expected, management confirmed the FY 2022 guidance and put some nice colour on 2021. The virtual Investors Day’s main topics gave helpful insights about the dynamics and drivers of the respective businesses. We see the company as well prepared and positioned.
Merck’s top-line came in weaker than expected as Healthcare faced harsher business conditions. Not infected, but affected by fewer doctor visits. Profitability was in line and street expectations were met. Life Science continued to see strong demand in Process Solutions, and Performance Materials was clearly helped by the strong contribution from Versum at all levels. Management’s guidance update confirms our strong view on the company.
Merck reported a strong set of figures, which were slightly above our expectations and beat consensus by 4-5%. The strong performance was driven by HealthCare and Life Science as Performance Materials saw a stabilisation in its profitability.
Management adjusted its COVID-19-related scenario and provided a quantitative FY guidance, where AlphaValue is at the lower end of the provided range and consensus at the midpoint.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Merck KGaA.
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Companies: Destiny Pharma Plc
Interims are in line with expectations and should reassure, particularly given the strong mid-teens growth ex-China. Improved pork prices should be supportive of a recovery in China in H2 and management remains cautiously optimistic over the full year outlook. New product development activities continue to plan, and should start to contribute from FY25 onwards. Our forecasts, Buy recommendation and 246p Target Price (2.0x EV/Sales) are unchanged. After recent weakness, the shares now stand at a
Companies: ECO Animal Health Group plc
Singer Capital Markets
Companies: RNO DOTD NTQ KMK PMG EVG
Dish of the day
BWP REIT joins the Wholesale Segment of the International Property Securities Exchange (IPSX). BWP REIT is a newly formed single asset company and has raised £35m by issuing 35m new ordinary shares at 100 pence per share to acquire Bridgewater Place, an office-led mixed use property in central Leeds and valued at £63m. The property is one of the tallest buildings in Yorkshire, comprising 234,000 sq. ft of office space, and is close to 90% let to EY, as well as multinatio
Companies: RNO BEM BOIL DOTD NTQ KMK PMG EYE EVG ENET
Inspiration Healthcare has provided an update on trading, noting that due to broad market uncertainty the company does not expect its FY23E revenues to ‘significantly exceed' FY22A revenues and as a result, H2/23E EBITDA is expected to be below H1/23A levels. We have updated our forecasts for FY23E and FY24E to reflect this update, removing revenue growth in the current year and shifting our previous revenue growth expectations out one year. We expect high-end, higher margin sales to have been p
Companies: Inspiration Healthcare Group PLC
Companies: ReNeuron Group plc
POLB announces that, further to its announcement in March 2022, the construction of the computational artificial intelligence (AI) influenza disease model has been completed by CytoReason Limited, indicating that it is on track to deliver outputs in Q2 2023. The model aims to unlock clinically meaningful insights into influenza infection and recovery through the analysis of POLB’s unique human challenge trial data. We view this rapid progress on the collaboration as positive and envisage that fu
Companies: Poolbeg Pharma Ltd.
FY23 interim results showed a sharp short-term decline in revenue. With a recovery expected in H2, our expectations are being maintained for a 12% y-o-y increase in revenue for FY2023. Loss at the EBITDA level was £1m (FY22 H1: loss of £250k), reflecting higher CoGS and R&D spend. Fusion’s results come ahead of a key milestone in the form of the move into commercialisation of OptiMAL, which has the potential to become an important revenue source in the future. We expect further growth in revenue
Companies: Fusion Antibodies Plc
Venture Life has announced the acquisition of HL Healthcare Ltd (HL) and its three Ear-Nose-Throat (ENT) brands, Earol, EarolSwim and Sterinase. Venture Life will pay £13m for the business which generated £4.5m of sales and £1.7m of EBITDA to the year-ending March 22, indicating trailing acquisition multiples of 2.9x and 7.6x, respectively. The portfolio is expected to grow in the year to March 2023 and we expect the acquisition to be accretive. The company has also announced additional distribu
Companies: Venture Life Group Plc
ReNeuron’s interim results announcement provided important support to the company after a year of change. The decision not to raise money when market conditions were unfavourable has resulted in a cash conservation programme that extends ReNeuron’s FY23 cash position beyond our previous estimates while ensuring continued development of the technology platform and maximisation of partnering opportunities. As investors’ focus return to the potential for a CustomEx™ licensing transaction, the incre
Companies: SDI DEST PPCGF
Dish of the day
Hellenic Dynamics (HELD.L) (formerly U.K. SPAC Plc) announces their First Day of Dealings on the Main Market (Standard segment). The Company has raised gross proceeds of £1.125m through a fundraising. Hellenic Dynamics plans to cultivate and export THC dominant medical cannabis products to the 25 countries in Europe that now allow medicinal cannabis for patients via prescription.
Whilst we were away….
Life Sciences REIT (LABS.L), moved from AIM to Main Market Premium on
Companies: FARN BIDS ATM MATD
Dish of the day
Ithaca Energy (ITH.L) has joined the Premium Segment of the Main Market. Based on the offer price of 250 pence per ordinary share, the market capitalisation will be approximately £2.5bn. Ithaca Energy is one of the largest independent oil and gas companies in the UKCS. The Company will target a free float of at least 10% of its issued share capital and expects to be eligible for inclusion in the FTSE UK indices.
OTAQ plc, (OTAQ.L) has joined the Access Segment of the AQS
Companies: BKY ATYM ACSO PCF SAR PYC WPHO
Q3 sales fell short of consensus and AV estimates while profitability was impacted by one-off charges. However, Innovative Medicines continued its growth/recovery momentum, with healthy growth in all therapeutic areas, except Neuroscience, where Zolgensma had a one-time adverse impact. Sandoz’s guidance upgrade was a positive, especially in the context of rising cost pressure squeezing other players. Overall, we remain positive on the stock, supported by the long remaining patent life of key dru
Companies: Novartis AG