(BFM Bourse) – The specialist in equipment and technologies necessary for the manufacture of biomedicines and vaccines has revised downwards its business development forecasts for the current year.
The stocks that were supported by a gain in activity during the health crisis sometimes find it difficult to negotiate the post-Covid period. This is the case of the Eurofins laboratory but also of Sartorius Stedim Biotech, a company specializing in the equipment and technologies necessary for the manufacture of biomedicines and vaccines.
This subsidiary of the German Sartorius AG, saw the demand for its products jump with the pandemic, to the point of reaching valuation levels which very seriously pushed it to the gates of the CAC 40, like again of Eurofins.
But with the transformation of the pandemic into an endemic, this demand necessarily subsides. And causes the company to undergo a normalization of its activity for several quarters. In the first three months of 2023, revenues also plunged by 18.4% like-for-like, over one year, which had been heavily penalized by the market.
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Stock market plunge
And this Monday the action suffered a new big stock market gamble, with a plunge of 13.3% around 10 a.m. This fall follows a profit warning issued Friday evening by the company.
Sartorius Stedim now expects revenue to decline “by a percentage in the low to mid-tens range for fiscal year 2023”, at constant exchange rates, i.e. a drop of around 1% to 5% . “Excluding Covid-19-related activities, revenue would decline by a percentage between the high single-digit range and the low tens range”, so between 7 and 11% , at constant exchange rates, continues the company.
Sartorius Stedim previously forecast growth at “low single digits” and “if we exclude Covid-19 related business, mid to high single digits”.
Given the drop in expected volumes, the company is also less optimistic about its gross operating margin (Ebitda) now forecast at around 30%, whereas the group previously expected a gross margin similar to that of last year, or 35%.
2025 objectives confirmed
“Due to the continued weak general demand momentum, Sartorius Stedim Biotech expects sales to develop below expectations in the second half of the year and is therefore adapting its forecast for the 2023 financial year”, explains the company in a press release.
“The main factors likely to hinder the commercial development of Sartorius Stedim Biotech are the longer than expected reduction in inventories with biopharmaceutical customers following the Covid-19 pandemic, as well as the relatively weak customers due to the available production capacities”, further advances the company.
Sartorius Stedim wants to believe that this normalization is only a “phase” which only “temporarily” eclipses its “growth engines” which are the life sciences and biopharmaceutical markets. Consequently, the group has maintained its objectives unchanged for 2025, namely revenues of 4.4 billion euros and an EBITDA margin of more than 35%.
An entry point for patient investors?
“Demand for life science tools has slowed due to funding issues for smaller biopharmaceutical companies, general macroeconomic uncertainty and comparable difficult times in which some purchases may have been brought forward,” said Morningstar in a note released Friday.
“If the shares (that of Sartorius Stedim and its German parent company Sartorius AG, editor’s note) end up trading at significant discounts to our new fair values, we believe that investors with a long-term horizon can consider this weakness as an opportunity to acquire shares of these growth companies at reasonable prices”, however warns the office, thus inviting investors to be patient.
Julien Marion – ©2023 BFM Bourse
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