Global Expansion And R&D Will Drive Success In 2026

Key Takeaways

• SKAN Group's strong order growth and substantial backlog suggest increased future revenues and visibility for the coming year.
  
• Investments in R&D, international expansion, and new AI services are positioned to enhance growth, improve margins, and increase profitability.
  
• Delays, strategic shifts, and increased R&D investments strain sales, profitability, and margins, with regulatory and economic risks further impacting growth and financial stability.

Catalysts

Provides isolators, cleanroom devices, and decontamination processes for pharmaceutical and chemical industries in Asia, Europe, the Americas, and internationally.

• SKAN Group reported a strong order intake growth of 21.8% in 2024, with a substantial backlog of CHF 318 million, providing visibility for 2025. This suggests an expected increase in future revenues as these orders are fulfilled.
  
• SKAN is investing heavily in R&D, with 8.3% of sales revenue being channeled here, aimed at product development and potential breakthroughs that could enhance future growth, impacting revenue and possibly net margins positively.
  
• Expansion in regional markets like Brazil, along with a noteworthy presence in Japan and South Korea, supports international growth, which could drive future revenue increases as these markets mature.
  
• The introduction of new services, such as AI-based maintenance and preapproved services, is expected to enhance high-margin service revenues, positively impacting net margins and possibly earnings once fully operational in 2026.
  
• Strategic initiatives including standardization and modularization efforts are expected to improve operational efficiencies. This could lead to cost reductions, thereby potentially improving net margins and overall profitability in the future.

SKAN Group Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming SKAN Group's revenue will grow by 17.8% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 10.7% today to 10.5% in 3 years time.
• Analysts expect earnings to reach CHF 62.3 million (and earnings per share of CHF 2.77) by about April 2028, up from CHF 38.8 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 36.4x on those 2028 earnings, up from 36.1x today. This future PE is greater than the current PE for the CH Life Sciences industry at 28.9x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 4.39%, as per the Simply Wall St company report.

SKAN Group Future Earnings Per Share Growth

Risks

• Project delays and shifts have impacted net sales, shown by sales slightly behind guidance, which could affect revenue growth in the coming year.
  
• The postponement of authority approval for preapproved services, now expected in Q1 2026, indicates potential risks in the execution of strategic initiatives, potentially impacting future revenue and margins.
  
• Increased investments in R&D and strategic projects, while aimed at growth, currently result in higher expenses, impacting net margins and profitability.
  
• Economic risks like U.S. tariffs could potentially increase costs or impact sales, particularly if tariffs extend to key materials or components, impacting operating expenses and bottom line.
  
• The reported significant investments in infrastructure and acquisitions without immediate returns could strain cash flow and financial stability, affecting net margins and earnings if not managed carefully.

Valuation

• The analysts have a consensus price target of CHF90.667 for SKAN Group based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CHF590.8 million, earnings will come to CHF62.3 million, and it would be trading on a PE ratio of 36.4x, assuming you use a discount rate of 4.4%.
• Given the current share price of CHF62.3, the analyst price target of CHF90.67 is 31.3% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.