Positive Clinical Results And US Launch Will Drive Future Success

Key Takeaways

• High repeat usage and indication expansion in the U.S. drive strong growth for CERAMENT G, enhancing future revenue prospects and market share.
  
• Upcoming FDA approvals and reimbursement adjustments, alongside strategic marketing investments, are expected to boost revenue and margins across underpenetrated markets.
  
• High selling expenses and currency fluctuations pressure net margins, while regulatory and structural challenges could hinder European market access and future revenue growth.

Catalysts

An orthobiologics company, develops and sells injectable bio-ceramic bone graft substitutes in Europe, North America, and internationally.

• The launch momentum for CERAMENT G in the U.S. is accelerating, with a notable trend of high repeat usage and expansion into additional indications among existing customers, which is expected to positively impact future revenue growth.
  
• The submission of the CERAMENT V application to the FDA and potential NTAP reimbursement provide future catalysts for revenue growth and improved margins once approved and implemented.
  
• The introduction of new reimbursement codes that increase NTAP reimbursement and a proposed general uplift in DRG codes for orthopedic surgeries are expected to boost revenues when they take effect, supporting increased sales of CERAMENT products.
  
• On a regional level, especially in North America, sales have seen significant year-over-year growth due to continued adoption and the expansion of indications for CERAMENT G, likely to support continued strong revenue and market share growth.
  
• Strategic investments in sales and marketing, along with planned additions to their EUROW Booster program, are expected to increase penetration in underpenetrated markets and positively impact revenue and margin expansion over the next few years.

Bonesupport Holding Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Bonesupport Holding's revenue will grow by 35.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from 13.9% today to 32.1% in 3 years time.
• Analysts expect earnings to reach SEK 843.6 million (and earnings per share of SEK 10.97) by about September 2028, up from SEK 148.0 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 37.9x on those 2028 earnings, down from 141.3x today. This future PE is greater than the current PE for the SE Biotechs industry at 32.5x.
• Analysts expect the number of shares outstanding to grow by 0.08% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 4.92%, as per the Simply Wall St company report.

Bonesupport Holding Future Earnings Per Share Growth

Risks

• Currency fluctuations, such as dramatic swings in the U.S. dollar to Swedish krona ratio, have had a negative impact on operating profit and could continue to affect net margins.
  
• The expiration of the NTAP for CERAMENT G in bone infections may influence sales if permanent reimbursement increases are not secured, potentially impacting future revenues.
  
• Regional structural disruptions and staffing strains in healthcare systems, especially in Germany and the U.K., can limit market access and growth potential, affecting European sales revenues.
  
• High selling expenses, including increased sales commissions and marketing costs, may pressure net margins despite strong revenue growth.
  
• The ongoing reliance on exchange rates for financial reporting may lead to volatility in reported earnings due to currency effects impacting operating assets in foreign currencies.

Valuation

• The analysts have a consensus price target of SEK419.75 for Bonesupport Holding 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 SEK474.0, and the most bearish reporting a price target of just SEK375.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be SEK2.6 billion, earnings will come to SEK843.6 million, and it would be trading on a PE ratio of 37.9x, assuming you use a discount rate of 4.9%.
• Given the current share price of SEK317.4, the analyst price target of SEK419.75 is 24.4% 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.