Tariff Risks And Execution Challenges Will Pressure Healthcare Devices Before Long-Term Trends Improve

Catalysts

About medmix

medmix provides precision delivery devices and systems for healthcare, beauty, and industrial applications.

What are the underlying business or industry changes driving this perspective?

• Although Dental is growing significantly above market and shifting into higher value categories such as cementation and adhesives, the pull forward of orders linked to U.S. tariff concerns may depress second half volumes and slow the translation of this mix upgrade into sustained revenue and earnings momentum.
• Although the global trend toward minimally invasive surgery and bone grafting supports long term demand for the new Vented G System and the scaled Atlanta site, execution risks in the second ramp up phase and potential customer qualification delays could cap the near term uplift in Surgery revenues and limit EBIT expansion.
• While auto injector penetration and the rise of biologics should benefit PiccoJect and D Flex over the coming years, prolonged dual sourcing by key customers and slippage in project milestones could extend the current revenue softness in Drug Delivery and restrain group margin improvement.
• Although demand for more sustainable packaging solutions is driving adoption of greenLine and ecopaCC with major industrial customers, slower macro conditions and geopolitical uncertainty in end markets may temper volume growth, delaying the full margin and cash flow benefits from medmix in sourcing and automation initiatives.
• While large new Beauty tenders and premiumization in cosmetics packaging should support a recovery from 2026, continued weak order intake in 2025 combined with aggressive cost out and automation projects raises the risk of underutilized capacity, which could pressure near term revenues and constrain net margin improvement.

Assumptions

This narrative explores a more pessimistic perspective on medmix compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts. How have these above catalysts been quantified?

• The bearish analysts are assuming medmix's revenue will grow by 3.6% annually over the next 3 years.
• The bearish analysts assume that profit margins will increase from -1.2% today to 5.6% in 3 years time.
• The bearish analysts expect earnings to reach CHF 28.9 million (and earnings per share of CHF 0.7) by about December 2028, up from CHF -5.8 million today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as CHF60.7 million.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 24.5x on those 2028 earnings, up from -77.6x today. This future PE is greater than the current PE for the CH Medical Equipment industry at 23.6x.
• The bearish analysts expect the number of shares outstanding to grow by 0.07% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.12%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Persistent revenue declines across several business units, including ongoing weakness in Beauty and Drug Delivery and FX headwinds that already drove organic volume down by 4.6% in the first half of 2025, could signal that secular growth in healthcare and premium packaging is not yet translating into sustainable top line expansion, putting long term revenue growth at risk.
• Reliance on aggressive cost out and automation to lift margins, including CHF 30 million of targeted savings and staff reductions that may only flow through with delays, could become harder to repeat over time as the easiest efficiencies are exhausted, capping future operating leverage and limiting structural net margin and earnings improvement.
• Exposure to geopolitical and trade risks, such as U.S. tariffs affecting Dental and Industry products and revenue tied to global brands in cyclical Beauty markets, may structurally increase input costs and pricing friction with customers, compressing EBITDA margin and constraining cash generation if price increases fail to fully offset these pressures.
• Execution risk around scaling new facilities and platforms, including the Atlanta ramp up, commercialization of PiccoJect and D Flex, and 2026 launches like CliX and the Vented G System, could result in delays, underutilized capacity and slower customer adoption, dampening expected high margin revenue contributions and limiting EBIT growth.
• The strategic pivot toward higher growth healthcare categories assumes sustained above market growth in Dental and Surgery, but any normalization after tariff driven order pull forwards, increased dual sourcing by key Drug Delivery customers, or slower project approvals could reduce mix benefits, tempering gross margin expansion and weakening medium term earnings momentum.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bearish price target for medmix is CHF14.5, which represents up to two standard deviations below the consensus price target of CHF17.5. This valuation is based on what can be assumed as the expectations of medmix's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CHF20.0, and the most bearish reporting a price target of just CHF14.5.
  
• In order for you to agree with the more bearish analyst cohort, you'd need to believe that by 2028, revenues will be CHF520.5 million, earnings will come to CHF28.9 million, and it would be trading on a PE ratio of 24.5x, assuming you use a discount rate of 6.1%.
  
• Given the current share price of CHF11.02, the analyst price target of CHF14.5 is 24.0% 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.