Thursday, 18 April 2024

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CFRA raises Lonza shares target, retains “Buy” rating By

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On Wednesday, CFRA, a notable financial research firm, increased its price target on shares of Lonza Group (LONN:SW) (OTC: LZAGY), a leading supplier in the pharmaceutical, healthcare, and life sciences industries. The new price target is set at CHF610.00, up from the previous CHF570.00, while the firm retains a “Buy” rating on the stock.

CFRA’s adjustment of the price target to CHF610 reflects a valuation based on an EV/EBITDA multiple of 25 times the firm’s 2024 EBITDA estimate or 22.5 times its 2025 EBITDA estimate. This valuation is consistent with Lonza’s three-year average EV/EBITDA of 22 times.

Despite anticipating a lower earnings period in 2024 due to the termination of the Moderna (NASDAQ:) contract, CFRA expects Lonza to experience a recovery post-2024. This optimism is supported by the growth of new assets and Lonza’s strong market position, coupled with the benefit of easier year-over-year comparisons.

The firm also acknowledged the recent executive appointment at Lonza. On April 2, 2024, the company announced Wolfgang Wienand as its incoming CEO, set to take the helm in the summer of 2024. Wienand, currently the CEO of Siegfried Holding, a smaller Swiss peer, has been recognized for driving growth and expanding margins since he became CEO in 2019.

The appointment of a new CEO comes as a resolution to the leadership search initiated in October 2023 after the departure of Pierre-Alain Ruffieux. CFRA views this executive change as a positive development that could alleviate some of the uncertainties surrounding Lonza’s management.

CFRA’s report reaffirms its confidence in Lonza’s future performance by maintaining its “Buy” rating. The firm’s estimates for the company’s financials remain unchanged, indicating a steady outlook on Lonza’s operations and market potential. The price target increase and the stable rating reflect CFRA’s anticipation of Lonza’s continued growth and its ability to navigate through the transitional phase in the coming year.

InvestingPro Insights

As investors consider CFRA’s optimistic outlook on Lonza Group, real-time data and insights from InvestingPro provide additional context for informed decision-making. The company’s aggressive share buyback strategy, as noted in one of the InvestingPro Tips, aligns with CFRA’s positive stance, potentially signaling management’s confidence in the company’s value. Additionally, the stock’s strong performance over the last three months, with a 43.05% price total return,…

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