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Our hopes that Lonza’s recent CMD would be a positive catalysis were well and truly stymied. Investors were clearly unhappy with some of the announcements and particularly the outlook given for 2024. The share price fell by 16% on the day itself and by a further -4% on the day after the presentations.
Companies: Lonza Group (LONN:VTX)Lonza Group AG (LONN:SWX)
AlphaValue
Out of the blue has come the departure of Mr Pierre-Alain Ruffieux only four weeks before the investors day. In our view, this might have happened after some strategic discussions about future targets and their achievability. As a reminder, the company had slashed its 2023 targets but confirmed that its mid-term targets should be achieved by 2024.
A CDMO business of a certain size, sales and profitability might be expected to have a good prognosis but Lonza has had to cut its FY guidance for two reasons: the pandemic-related boom of taking additional food supplements has dried up faster than expected and venture capital has become somewhat unforthcoming given the higher level of interest rates. The cut to the margin guidance is more severe than the top-line reduction. The question is what percentage of the new capacity will be utilized
Lonza reported a very strong set of 2022 figures and sees itself as well on track to attain the mid-term guidance. 2023 will mark a dip sandwiched between two stronger years. Our more cautious estimates were beaten (sales: +7.2%; EBITDA: +25.8%) as well as the consensus (sales: +0.1%; CORE EBITDA: +2.5%). The strong beat to our EBITDA was only partly explained by divestment gains (CHF202m). 2023 profitability will take a breather due to inflationary effects and a more negative mix yoy.
It looks as if lucky Lonza has been able to mitigate the higher raw material prices – at first sight. The 20bp lower profitability looks more like a timing effect than a larger issue. However, it could become the latter in H2, if higher input costs can not be passed on. In H1, the company benefited from a large cancellation fee of ~3% of group sales), which was not seen as a one-off. Sure! This upset our investment case and our estimates were beaten by +4.7% (sales) and +12.3% (EBITDA).
Lonza reported the expected strong set of figures. There were no upside surprises (top line: AlphaValue: +3.8%; consensus: +4.1%; adjusted EBITDA – consensus: +0.2%; EBITDA: AlphaValue: -0.9%), but the comparison yoy shows a strong performance. Unfortunately, shareholders do not benefit from the strong operating development as the dividend proposal remained unchanged. We understand the divestment proceeds are reserved for future growth projects or acquisitions, but a small amount could be used
The current situation in the CDMO arena looks a bit like an arms race and Lonza seems to have firm plans to be part of it. The recently updated mid-term guidance is the explanation to do so, in our view. Management is strongly dedicated to staying with the extraordinary high EBITDA margin for the coming years. Lonza’s hybrid investors day was well attended in Zurich, in which we participated.
… on an adjusted basis. Lonza reported some strong figures, riding the crest of the wave due to the current boom. However, the reality gives profitability a hard landing and the near-term future might be challenged by sourcing. In the adjusted figures’ parallel existence, Lonza beat consensus (sales: +3.2%; core EBITDA: +7.6%), whereas IFRS torpedoed profitability and came in below our not-too-optimistic expectations.
We had expected Lonza’s FY 2020 release would be difficult to read, but the presentation of the figures with no helpful tables requires patience to find all the jigsaw pieces. This makes the reported strong performance and margin increase less important in our view. All in all, the FY figures met our expectations. A comparison to consensus does not look very helpful as it appears not to reflect the latest changes.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Lonza Group. We currently have 9 research reports from 1 professional analysts.
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Cavendish
Verici’s $8.2m gross raise means the company can now focus on scaling Tutivia and invest further into the development of existing and new products. With a uniquely well balanced Tutivia test, a growing sales team and LCD coverage expected later this year, we forecast Tutivia revenues of $2.6m/$4.5m in FY24E/FY25E. The Thermo Fisher deal was a huge validation of Clarava and Verici’s technology and in addition to licensing/milestone payments, we forecast double digit royalties on net Clarava sales
Companies: Verici Dx Plc
Singer Capital Markets
26th March 2024 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment object
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Hybridan
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Turner Pope Investments
SkinBioTherapeutics has reported on the 6-months to December 2023, noting steady revenue growth from lead product AxisBiotix-Ps, progress on the development of SkinBiotix with partner Croda (Sederma) and post-period end, the acquisition of Dermatonics. The company has updated on several positive developments through the start of 2024, including AxisBiotix Acne positive interim results, initiation of research on the MediBiotix Pillar and progress with the oral and inflammation programmes. The com
Companies: SkinBioTherapeutics Plc
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The Hardman & Co Healthcare Index (HHI) has been running since 2009. Its main function is to highlight the attractions of life sciences investments over the long term. For the second year running, apart from global economic influences affecting world markets, performance in 2023 was dented by the capital-intensive nature of the sector. The HHI fell 3.7%, to 483.8, underperforming the main London markets – FTSE 100 (+3.8%) and FTSE All-Share (3.8%) but outperforming the FTSE AIM All-Share Index (
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Hardman & Co
On 18th December 2023 Incanthera announced a deal with Marionnaud in Switzerland to distribute ‘Skin+CELL’, its advanced dermatological solution for the delivery of vitamin B3 for skin protection and cosmetic rejuvenation. This gives Incanthera access to a high-end cosmetics distribution presence in Europe, and in addition, ownership of Marionnaud by AS Watson, the largest cosmetics distributor in Asia, offers significant new market opportunities further afield.
Companies: Incanthera Plc
Stanford Capital Partners
FY EBITDA and EBIT came in materially above consensus FY EBITDA came in at EUR98.8m, down 4% yoy and 12% above consensus. The EBITDA margin was 12.6%. Restated for one-off costs, it was 13.1%, more than 2 percentage points above the guidance. It was fully explained by price increases, notably on X-ray, mix and control of fixed costs. FY EBITA came in at EUR38m, 46% above consensus. 2024 guidance looks conservative Guerbet is aiming for organic growth above 8% (8.8%e). With markets growing at
Companies: Guerbet (GBT:EPA)Guerbet SA (GBT:PAR)
BNP Paribas Exane - Sponsored Research
IRLAB Therapeutics has confirmed the FDA’s alignment with its proposed Phase III programme for mesdopetam in levodopa-induced dyskinesias (PD-LIDs), following receipt of the minutes from its end-of-Phase II (EoP2) meeting held last month. Notably, the FDA has agreed on the primary endpoint being the Unified Dyskinesia Rating Scale (UDysRS), on which mesdopetam demonstrated a statistically significant improvement (p=0.026) in the Phase IIb study (secondary endpoint of that study). IRLAB will now
Companies: Irlab Therapeutics Ab
Edison
Tissue Regenix has reported on strong performance through 2023, noting record revenues driven by product adoption and expanded distribution, positive adjusted EBITDA for the first time and an increased cash position versus H1/23. FY23 revenues grew 20% to $29.5m supported by 25% growth from BioRinse products and 17% growth from dCELL products. Significantly, Tissue Regenix reported its first adjusted EBITDA profit for the year, +$0.9m, supported by revenue growth and cost management. We expect t
Companies: Tissue Regenix Group plc
Creo Medical has published a trading update for the 12 months to December 2023, during which the company focused on commercialising its core technology. Revenue for the period increased 13% YoY to £30.8m, while the underlying operating loss improved to £16.4m. Operationally, during the period, the number of confirmed users of Creo’s Speedboat range more than doubled over the year, the first procedures with MicroBlate Flex to ablate lung tumours were performed and Creo expects to receive regulato
Companies: Creo Medical Group Plc
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LungLife AI is a medical diagnostics company focused on the development of AI-supported blood-based tests for the early detection of lung cancer. It has identified a significant medical need for non-invasive, sensitive and specific tests in early-stage lung cancer. The company’s core technology, the LungLB test, seeks to detect circulating tumour cells (CTCs) to identify malignant lung nodules. It aims to apply machine learning/AI (ML/AI) to derive algorithms to increase test accuracy. Following
Companies: LungLife AI, Inc.
This month's feature article is entitled 'Gold and a Chinese Credit Event'. A Western phenomenon? If you own, or are considering owning, gold or gold equities, it’s likely that you’re concerned about protecting your wealth, or the performance of your fund, in the expectation of some kind of financial instability. Maybe your confidence in policymakers is ebbing, or you’ve researched debt bubbles in history and concluded that physical gold and silver have been the safest places to be invested whe
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