Segments a bit mixed but unspectacular at the group level

No real surprises at the group level as the management had already given some indications at the recent Investors Day. Display Solutions and Life Science Services were a positive surprise, whereas the weaker sales from the Mavenclad franchise was a slight negative. The good news was that development remained on the expected trajectory and, in particular, the fact that Process Solutions may have seen an inflection point in terms of orders. The Group’s profitability was 9.4% ahead of our expec

Watch out for 2024

Merck’s investors day had no negative surprises. However, we were given the first glimpses of 2024, which gave us a positive impression. Additionally, the management was confident of meeting the 25by25 target, but was a bit shy about explaining how it believes the existing delta will be organically closed. The breakout sessions provided some helpful insights.

Merck’s business model shows its strengths

When two businesses face headwinds, the third does the job. This is why we are so in favour of Merck’s multi-industry business model. Life Science and Electronics are facing some headwinds after the boom, which makes 2023 something of a transition year – especially due to the fact that the negative effects will remain around for longer than previously expected. In 2024, things should become easier. Investors welcomed the reported Q2 figures, which were a beat to consensus (sales: +1.0%; adjuste

A more moderate 2023

The management released the detailed FY guidance, which was a blow to our fairly optimistic expectations. This can be partly explained by our overly-optimistic stance on Life Science and Electronics. We see this guidance as quite realistic in that it reflects the many ifs and whens. However, the Q1 figures comfortably beat out expectations (sales: +0.1%, consensus: +0.4%; adjusted EBITDA: +6.2%, consensus: +3.3%).

Hardman & Co Monthly: April 2023

Feature article: 2022 Pharma Statistics - 8.7% growth – but worrying signs An efficient reporting system has seen all the listed multinational pharmaceutical companies announcing results for 2022, which has given us the opportunity to update our industry statistics and drug database. This report provides the first snapshot of the global and US rankings of the top 20 drug companies for 2022. 2022 was characterised by 8.7% underlying growth, offset by a large forex impact (-12%), due to USD stren

Fading momentum

Merck reported a good set of figures fully achieving the guidance. However, the firm did not manage to beat our higher expectations (sales: -1.2%; adjusted EBITDA: -6.8%) nor those of the consensus (sales -0.3%; adjusted EBITDA: -3.8%). We are nonetheless fine with the miss as it does not change our strong view on Merck. On a closer look, this miss mainly stemmed from the various developments in Life Sciences, where COVID-19-related business decelerated faster than anticipated and where there w

No Qatar push

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.

Merck Inc.: Keytruda & Other Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (08/22)

Merck continues to perform pretty well in the last quarter and delivered another all-around beat while continuing to bid on long-term growth. During the quarter, it achieved robust bottom and top-line growth and has made some additional vital clinical advancements in its pipelines. The exceptional performance in the quarter was led by robust growth of main products, which include Bridion, Gardasil, and Keytruda. For pediatric cases, Vaxneuvance has received an extended approval from the FDA. The

Two are better than one

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 & Company Inc.: Molnupiravir, Keytruda & Other Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (05/22)

Merck had a decent start to 2022 and achieved noteworthy clinical advancements over the research pipeline, and Acceleron has been successfully integrated. The company has shown strong commercial execution over a wide set of key drivers of growth mainly Animal health, Gardasil, and Keytruda. The biggest outperformer for the company was the molnupiravir which, despite initial doubts, generated $3.2 billion in revenues, exceeding the $500 million expected by Wall Street analysts. Merck’s business o

A winning team keeps up the good work

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

A good ending despite slightly troubled pharma

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.

Merck & Co., Inc. - Investment Thesis, Key Drivers, Financial & Price Forecasts, DCF Valuation 2/22

Merck delivered a remarkable financial execution in the third quarter which is expected to continue in the upcoming result. The investments that the management is making in their strong pipeline and portfolio, as well as in business development providing critical advances and long-term value to patients and shareholders. The increasing popularity of their Molnupiravir medication against Covid-19 across the globe has been an important growth driver. The management has also continued to implement

Streamlined and focused

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.

A shortage as a booster

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.

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

The Hardman & Co Monthly: April 2024

Feature article: Steady as she goes, but could be better: A review of investment company liquidity since 2016 Liquidity is the lifeblood of equity markets. The measurement of liquid asset availability to a market or company is a way of gauging a market’s health. This article builds on our previous work, which analysed the liquidity data for non-financial trading companies, by applying the same analytical techniques to the investment companies (IC) space. We analyse liquidity for ICs as a whol

Hybridan Small Cap Feast - 15 April 24

15th April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: Change of Market: TheWorks (WRKS.L) a multi-channel value retailers of books, arts and crafts, stationery, toys and games, offering customers a differentiated propositio

Morning Note – 8 April 2024

Avon Protection - Unmasking its growth potential

Avon Protection’s capital markets day highlighted its continued focus on medium-term margin expansion (targeting operating margin of 14–16%), concentrating on its core business of respirators and head protection. The unwinding of the armour business, alongside the consolidation of Team Wendy (acquired in H220) should enable Avon to benefit from rising global defence spending. Its strong relationship with the US DoD, and organic growth opportunities with recurring revenue from necessary product r

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

Cambridge Nutritional Sciences (CNS) has published its H1 2024 results to end September 2023. Group revenues grew 44% to £4.9m and gross profits increased by 63% to £3.1m, with the company benefitting from newfound operational efficiencies. With its now streamlined strategy focussing on the core Health & Nutrition business and the initial signs of an encouraging uptick in sales momentum, we believe the company is well positioned for growth that will help create future value for shareholders. We

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

Morning Note – 22 March 2024

LIBERUM: Futura Medical: An increasing degree of confidence

Diaceutics | FY23 update – 22% revenue growth, £16.7m YE cash

Diaceutics has released a trading statement for the year to December 2023 guiding to revenue growth of 22% YoY to £23.7m, up 19% on a constant currency basis. The order book jumped 57% to £26.6m, of which c£12.3m is expected to be realised in FY24, and which currently stands at £30.8m. The proportion of recurring revenue continues to increase and is now over 50% (FY22 35%). Cash at YE23 stood at £16.7m, indicating a near halving of the rate of cash burn in 2H23 compared to 1H23. We adjust our FY

Belluscura Trading Update

Belluscura has released a Trading Update stating that due to the delay in securing funding and Chinese NMPA approval, sales and manufacturing have been delayed by at least four months and it now expects EBITDA breakeven in Q3 and to turn cashflow positive in Q1 2025.

Morning Note – 12 February 2024

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

Poolbeg Pharma - Initiation and FY 2021 results

Poolbeg Pharma is a clinical-stage pharmaceutical company focused on the development and commercialisation of therapies to treat and prevent infectious diseases, with a capital-light model that intends to monetise its assets on early proof of concept data. Its lead asset, POLB 001, is a p38 MAP Kinase Inhibitor for the treatment of severe influenza, with Phase Ib data readout by year-end. Two late preclinical assets (POLB 002 – intranasal RNA-based immunotherapy for respiratory viral infections

Evgen Pharma - Acquisition and £0.85m equity raise

Evgen Pharma has acquired Chronos Therapeutics Ltd for a total upfront consideration of c£0.9m, payable in Evgen shares. Accompanying this, Evgen has conditionally raised gross proceeds of £0.85m through an equity placing with the potential to raise a further £1.0m through a retail open offer and additionally up to £2.0m. The proceeds will fund several initiatives including maintenance of the acquired Chronos Therapeutics patent portfolio and to continue support manufacturing for lead clinical a