Health equity research

Explore the most viewed and latest equity research and media content for companies within the Health sector.

Companies working in the Health sector include pharmaceuticals, biotech firms, and medical equipment & service providers.

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Mid-term growth drivers remain intact

  • 21 Jan 17

Carl Zeiss Meditec’s (CZM) Q4 FY16 revenue came in below our estimates but profitability outperformed. Revenue at CER was down 1.9% (vs AV estimate: +4.3%), primarily due to a slowdown in the ophthalmology (-8.3% vs AV estimate: +7%; accounts for c.31% of Q4 16 revenue) and microsurgery segments (-4.5% vs AV estimate: +0.5%; accounts for c.29% of Q4 16 revenue). High prior year comparables suppressed the growth in surgical ophthalmology and microsurgery (+34% and +24%, respectively) during the quarter. However, the ophthalmic systems business was up 5.7% (vs AV estimate: +5%; accounts for c.40% of Q4 16 revenue), wherein, the good performance in the refractive laser business was slightly offset by competitive pressure in the diagnostic business. Geographically, the growth momentum sequentially decelerated in the APAC region (+11.3% vs Q3 16: +25.3%; accounts for c.36% of Q4 16 revenue), primarily due to a slowdown in Japan. The dismal performance continued in the EMEA region (-6.4% vs Q3 16: -6%; accounts for c.31% of Q4 16 revenue), on the back of the challenging economic/political situation in Southern Europe and the Middle East. The Americas region was also under pressure (-9.7% vs Q3 16: -6.7%; accounts for c.33% of Q4 16 revenue) due to the intense competition in the US diagnostics market and the weak macro environment in Brazil. Total revenue decreased by 0.5% (vs AV estimate: +6.5%), reflecting a +1.4% currency effect. However, the EBIT margin strengthened to 15.1% (vs AV estimate: 13.4%), largely driven by a favourable product mix in the ‘cash cow’ microsurgery business (25.4% vs AV estimate: 21.9%). Moreover, a lower than expected tax expense further underpinned the EPS (€0.38 per share vs AV estimate: €0.28). For FY16, the total revenue (€1,088m) came in at the lower end of the company’s guidance (€1,080-1,120m). Similarly, the 14.2% EBIT margin was also within management’s expectation (13-15%). Management has proposed a dividend of €0.42 per share (vs €0.38 in FY15), which translates into a c.35% payout ratio. For FY17, management expects revenue to grow at least in par with market growth (low to mid single-digit) and the EBIT margin to be in the 13-15% range.

Struggles easing but tough US, Brexit and rising competitive threats a bit concerning

  • 20 Jan 17

After a challenging FY15, Coloplast ended FY16 on a better footing, albeit not devoid of new troubles (additional mesh litigation provision of DKK750m incurred in September 2016, totalling DKK5.3bn now). Q4 16 sales – +3% to DKK3.7bn (7% organic growth and a 4% forex headwind) – were slightly below our as well as consensus expectations while adjusted net income came in marginally below ours but a tad above consensus estimates. On an adjusted basis, EBIT is up 3% yoy (margin constant at c.34% yoy) and net income by 10% yoy. For the full year, sales increased by 6% – 7% organic and 1% negative currency impact – to DKK14.7bn while adjusted EBIT rose by 7% to DKK4.8bn. Management has recommended a final dividend of DKK9 per share (total dividend for the year DKK13.5 vs. DKK12.5 for the previous year) and bought back shares worth DKK500m as part of its current DKK1bn programme running until the end of FY 17. Coloplast acquired Comfort Medical, a US-based direct-to-consumer dealer of catheters and ostomy supplies, for $160m (c.DKK1,120m), in an effort to boost its direct sales while it remained locked out of GPO contracts in the US. Based on Comfort’s expected FY 16 sales of $38m, the deal translates into an EV/Sales multiple of c.4x. Subject to the completion of the deal by Q1 FY 16/17, Coloplast has increased its revenue growth guidance in DKK of 5-6% for FY 16/17 by 1-2%. The rest of the FY 17 guidance remains unchanged – 7-8% organic revenue growth, the EBIT margin in the range of 33-34% at CER and c.33% in DKK, capex of c.DKK700m and an effective tax rate of c.23%.