Leveraging Advanced Therapies And Single-Use Technologies Will Improve Operational Efficiency

Key Takeaways

• Recovery in the bioprocessing market and consumables demand is expected to drive revenue growth and support profitability improvements.
  
• Strategic focus on advanced therapies and operational efficiency may enhance margins and strengthen the balance sheet through increased free cash flow.
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Catalysts

Provides bioprocess solutions and lab products and services in the United States and internationally.

• Sartorius anticipates a recovery in the bioprocessing market driven by consumables demand, which saw a significant order intake increase in Q4 2024. This is expected to positively impact revenue growth.
  
• The company expects to achieve moderate profitable growth above market rates in 2025, with a slight increase in underlying EBITDA margin, emphasizing improved operational efficiency and capacity utilization.
  
• Sartorius plans on leveraging its strong presence and unique product portfolio in advanced therapies and single-use technologies, which could contribute to higher revenue and margin expansion.
  
• The efficiency program in 2024, which reduced expenses and improved profitability, is expected to continue contributing to margin stability and potentially enhance net margins in subsequent years.
  
• Sartorius aims for further organic deleveraging through increased free cash flow from improved working capital and CapEx management, which could enhance earnings and strengthen the balance sheet.

Sartorius Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Sartorius's revenue will grow by 9.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from 2.3% today to 9.1% in 3 years time.
• Analysts expect earnings to reach €391.8 million (and earnings per share of €5.34) by about January 2028, up from €77.2 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €267 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 58.6x on those 2028 earnings, down from 247.9x today. This future PE is greater than the current PE for the GB Life Sciences industry at 23.6x.
• Analysts expect the number of shares outstanding to grow by 2.07% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 5.09%, as per the Simply Wall St company report.

Sartorius Future Earnings Per Share Growth

Risks

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Valuation

• The analysts have a consensus price target of €271.2 for Sartorius based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €330.0, and the most bearish reporting a price target of just €182.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €4.3 billion, earnings will come to €391.8 million, and it would be trading on a PE ratio of 58.6x, assuming you use a discount rate of 5.1%.
  
• Given the current share price of €277.2, the analyst's price target of €271.2 is 2.2% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• 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.