Disappointing preliminary Q3 23 puts mid-term outlook in question

Sartorius Stedim reported weak Q3 23 preliminary numbers while also issuing a second profit warning for FY23, citing a longer-than-expected inventory rationalisation and the weak demand recovery. Moreover, the firm is also reviewing its mid-term (FY25) outlook. Although the double-digit decline in the share price (-16% at pixel time) is likely an over-reaction, the uncertainty around the mid-term outlook may well scuttle any near-term recovery.

Q2 23 weakness overshadowed by positive management commentary

Sartorius Stedim announced soft Q2 23 numbers, missing estimates. Sales declined by 19.7% while the order intake fell by 36.9%. However, the management’s confidence in returning to growth in Q3/Q4 led to a 9% rebound in the share price late in the session. The FY23 outlook points to a low-to-mid teens sales decline and an EBITDA margin of ~30%. The broad-based pressure is expected to ease, and the recently-downgraded guidance appears achievable with order book growth set to return.

Weak start puts FY 23 guidance at risk

Sartorius Stedim reported lower-than-expected Q1 23 sales, down 17.2% YoY in constant currency terms, with a 490bps contraction in the EBITDA margin to 30.3%. This soft performance was mainly due to the weak volume development. With order intake down 37.5%, the near-term remains uncertain, sending the stock price >8% lower. Although the company maintained its FY 2023 guidance, the weak start to the year will see us trim our estimates by mid-to-high single digits.

Q4/FY22: soft FY 23 outlook overshadowed by FY 25 target upgrade

Sartorius Stedim reported FY22 sales growth of 15.1% in cc terms with an underlying EBITDA margin of 35% coming in 40bp ahead of estimates. For FY23, the firm expects soft sales growth of low single-digit with a stable EBITDA margin. However, the bigger news was a 10% upgrade to the firm’s FY25 sales estimate. We expect a high single-digit cut to our FY23 top-line estimates, the impact of which should be buffered by the more promising longer-term outlook.

Q3 22: Single-digit growth spooks investors

Sartorius Stedim reported soft Q3 22 numbers with revenue growth of 7.8% on a cc basis, vs the double-digit growth posted in the last few quarters causing the stock to dive by 16%+ following the announcement. The firm cut its FY22 top-line growth outlook to the lower half of the previous 15-19% range while re-iterating its EBITDA margin expectation of >35%. We will trim our estimates to reflect the weak Q3 performance and the muted growth in the order book.

Q2 21: strong underlying business shines through the order book decline

Sartorius Stedim reported soft Q2 22 numbers with revenue of €861.8m, up 17% on a cc basis, leveraging broad-based growth. EBITDA, at €303.2m, resulted in a margin of 35.2%, down 150bp due to planned increases in opex. The firm re-iterated FY22 guidance of 15-19% with an EBITDA margin >35%, effectively upgrading its core business guidance as COVID-19-related vaccine normalisation was steeper than expected. We will raise our estimates.

Strong Q1 22 leaves room for guidance upgrade

Sartorius Stedim reported a strong set of Q1 22 numbers as sales rose 27.6%, driven by broad-based growth. The EBITDA margin was 35.2% (-20bp), as operational leverage was offset by currency headwinds. Order intake was down 8.6%, largely attributable to the expected decline in bioprocessing. Encouragingly, the order intake figures were up sequentially. FY 22 guidance – 15-19% top-line growth and a >35% EBITDA margin – was unchanged. We will upgrade our forecasts to reflect the strong Q1 showi

Solid Q3 21. Guidance surprisingly re-iterated leaving room for near and mid-term forecast upgrades.

Sartorius Stedim delivered another strong quarterly showing (+48/61.3% sales/EBITDA growth, respectively), trumping estimates on the top as well as the bottom line. However, the re-iterated guidance implies a very conservative end to FY21. Moreover, with pandemic tailwinds expected to persist in FY22, a mid-term (FY25) guidance upgrade is likely. We will upgrade our estimates to factor in the strong showing as well as quicker than expected mid-term execution.

Solid Q2 21 was largely expected

Sartorius Stedim’s Q2/H1 21 earnings had little element of surprise following the preliminary announcement on 6 July. H1 sales (+61.1%), EBITDA margin (36.1%) as well as guidance (FY21 top line +48%, margin at 36%) were all in line with the preliminary numbers. The strong performance has resulted in strong growth in cash flows as well as an improvement in leverage metrics. However, given the largely expected showing, we do not foresee any significant change to our estimates or target price.

Solid Q1 21 surprisingly fails to lift outlook

Sartorius Stedim’s Q1 21 numbers trumped estimates. Sales were up 61.1% on a cc basis, while order intake growth was even more impressive (+95.9%). EBITDA was up by 82.8%, with the associated margin expanding by 540bp. FY21 guidance was unchanged: revenue growth of 38% and EBITDA margin of 33%. We will upgrade our estimates and target price to factor in the strong performance.

Strong FY20 drives mid-term guidance upgrade

Sartorius Stedim reported solid FY20 numbers with 34.6%/56.7% growth in revenue/order book, respectively. Growth was largely attributable to bioprocessing (+34.4%/+56.4% revenue/order growth). EBITDA came in at €604.7m (+43.5%), with the associated margin at 31.7%. For FY21, the top-line growth/EBITDA margin is expected at 20-26%/32% respectively. The company also raised its mid-term outlook – FY25 revenue of €4bn (vs €2.8bn previously) and an EBITDA margin of 33% (vs 30% earlier). We will upgra

Q3 20: more COVID-19 tailwinds than expected

Sartorius Stedim reported very strong Q3 20 numbers, as sales grew by 43% to €510.4m, driven by a 44.1% growth in bioprocessing. EBITDA was up 61.2% to €172.4m, with the associated margin at 33.8% (+470bp), benefitting from significant operating leverage. Management now expects FY20 growth at the top end/above the previous guidance of 26%-30% and an EBITDA margin at 32% (vs 31% previously). We will upgrade our estimates to factor in the strong Q3 showing and sustained tailwinds in bioprocessing.

Strong Q2 drives FY20 guidance upgrade

Sartorius Stedim reported strong Q2 20 numbers, with sales up by 21.7% on a cc basis, to €447m, and the EBITDA margin at 30.3%, trumping our estimates as well as consensus. The strength was attributable to 20.2% growth in bioprocessing solutions (BPS). Management upgraded FY20 guidance (growth of 26-30% vs 17-21% earlier; EBITDA margin at 31% vs 30% previously), thanks to the COVID-19-triggered momentum in BPS. Following the strong performance, we will be upgrading our estimates.

Q1 20: COVID-19 headwinds? Not for Sartorius Stedim

Sartorius Stedim reported a solid set of Q1 20 numbers (22.3% growth, 30% EBITDA margin), driven by broad-based growth. Management now expects FY 20 top-line growth of 17-21% (vs 11-14% earlier) and an EBITDA margin of 30% (vs 29.5% earlier). The COVID-19 impact has so far been marginally positive due to increased stocking activity by customers. However, in light of the ongoing uncertainties, the firm may reduce its FY19 dividend proposal. Factoring in the strong performance, we will be upgrad

Another good quarter, another guidance upgrade

Sartorius Stedim reported solid Q3 19 results. Sales were up 16.4%, on a cc basis, while EBITDA came in at €110.2m (margin +140bp). Following the strong showing, management upgraded its FY 19 top-line growth guidance to the upper end of the earlier 12-16% range while re-iterating its EBITDA margin expectations of 29.2% (+1pp vs FY 18). The company also announced the acquisition of parts of Danaher’s life sciences business. Following the strong performance, we will be upgrading our estimates.

Warpaint London+ (W7L, House Stock at 375p) - Trading ahead of expectations - +10% upgrade implied

The Hardman & Co Monthly: April 2024

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Avon Protection - Unmasking its growth potential

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Hybridan Small Cap Feast - 15 April 24

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Morning Note – 9 April 2024

Morning Note – 8 April 2024

Hybridan Small Cap Feast - 17 April 24

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Cambridge Nutritional Sciences - H1 2024 interims: Executing a newly focussed st

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Morning Note – 22 March 2024

Venture Life Group - Strong organic growth; focus on EBITDA

Venture Life has reported FY23 results to December 2023, following the February trading update. Revenues grew 17% in the year to £51.4m (our est. £50.7m) and adjusted EBITDA was £11.6m (our est. £11.6m). Cash conversion was 85%, generating £9.8m of cash from operations. Cash generation and no M&A in 2023 allowed the company to de-lever, closing FY23 with net debt to adjusted EBITDA at 1.3x. Management have focused on growth with three therapy areas generating double-digit revenue growth and onli

Creo Medical - Solid FY23 lays the groundwork for 2024

Creo Medical has released a trading update for FY23, an active year for the company, with progress made across all business segments. Traction improved in H223, following Speedboat Inject’s European clearance for upper gastrointestinal (GI) procedures and the accelerated approval and launch of Creo’s slimmest electrosurgical device, Speedboat UltraSlim. Top-line growth was supported by continued streamlining of the cost structure, resulting in a better-than-expected underlying EBITDA loss (impro

Hardman & Co Healthcare Index: 2023 – Capital demands dent performance

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Warpaint London + (W7L, House Stock at 382p) - Late-year sparkles– another double-digit upgrade to FY23F EPS

Zoetis Inc.: Launch Of CircoMatch & Other Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (02/23)

Zoetis delivered a decent set of results for the last quarter of 2022 meeting analyst expectations as well as the high end of its management guidance. Despite the economic challenges, ongoing pandemic recovery, and the political unpredictability brought on by the war in Ukraine, they delivered operational growth for the year in each of their top 13 markets. The company's unique companion animal portfolio drove its 8% operational revenue increase for the year, growing 14% operationally. In compar