Lutetium-177 Approval And Actinium Production Will Expand Radioisotope Markets

Published
10 Feb 25
Updated
14 Aug 25
AnalystConsensusTarget's Fair Value
€21.67
16.3% undervalued intrinsic discount
14 Aug
€18.13
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1Y
26.0%
7D
-5.0%

Author's Valuation

€21.7

16.3% undervalued intrinsic discount

AnalystConsensusTarget Fair Value

Last Update01 May 25
Fair value Decreased 66%

Key Takeaways

  • European approval of Lutetium-177 and actinium production expansion are poised to boost revenue and product availability in new markets.
  • Strategic partnerships and reduced production delays are expected to improve EBIT margins and stabilize revenue growth.
  • Increasing competition and cyber vulnerabilities along with financial transparency issues could threaten Eckert & Ziegler's revenue growth, profitability, and investor confidence.

Catalysts

About Eckert & Ziegler
    Manufactures and sells isotope technology components worldwide.
What are the underlying business or industry changes driving this perspective?
  • The approval of Eckert & Ziegler's lutetium product, Lutetium-177, by the European Commission allows for sales expansion across multiple countries, potentially boosting future revenue growth.
  • The commencement of actinium production in collaboration with a partner in the Czech Republic is expected to bolster product availability and related sales, impacting future revenue streams.
  • The significant revenue growth in the Medical business, especially from products like gallium generators, is set to enhance profitability and overall earnings moving forward.
  • Strategic partnerships and licensing deals, such as those with Telix and QKM, bring immediate cash inflows and increase the EBIT margins, which are projected to rise to ambitious levels, thereby impacting earnings.
  • Anticipated reduction in production delays from a cyberattack recovery and ongoing market demand for radioisotopes are expected to stabilize operations and maintain revenue growth trajectories.

Eckert & Ziegler Earnings and Revenue Growth

Eckert & Ziegler Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • Analysts are assuming Eckert & Ziegler's revenue will grow by 7.6% annually over the next 3 years.
  • Analysts assume that profit margins will increase from 13.9% today to 15.2% in 3 years time.
  • Analysts expect earnings to reach €56.9 million (and earnings per share of €0.86) by about August 2028, up from €41.5 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 67.9x on those 2028 earnings, down from 89.2x today. This future PE is greater than the current PE for the GB Medical Equipment industry at 21.9x.
  • Analysts expect the number of shares outstanding to decline by 7.0% per year for the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 5.42%, as per the Simply Wall St company report.

Eckert & Ziegler Future Earnings Per Share Growth

Eckert & Ziegler Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • Increasing competition in the radiopharmaceuticals sector poses a threat to market share and could impact revenue growth if new competitors capture market share from Eckert & Ziegler.
  • The delay in finalizing financial statements due to ESEF tacking could signal issues with financial transparency or accuracy, which may deter investor confidence and impact perceived earnings quality.
  • Ambitious EBIT margin targets, such as the 24% margin forecast, may not be sustainable or realistic, potentially affecting future earnings if the company fails to meet these expectations.
  • Exposure to hyperinflation in regions like Argentina could lead to financial volatility and impact net margins negatively as additional adjustments or losses are recognized.
  • The cyberattack on Eckert & Ziegler suggests vulnerabilities in IT infrastructure that may pose risks to operational continuity and elevate unexpected costs, thus potentially harming net margins and profitability.

Valuation

How have all the factors above been brought together to estimate a fair value?
  • The analysts have a consensus price target of €21.666 for Eckert & Ziegler 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 €373.0 million, earnings will come to €56.9 million, and it would be trading on a PE ratio of 67.9x, assuming you use a discount rate of 5.4%.
  • Given the current share price of €19.53, the analyst price target of €21.67 is 9.9% 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.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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