I've always been a little surprised at how willing investors can be
to bid up the manufacturers of pharmaceutical components. While these
are fine specialty chemical businesses, nothing about the revenue or
margins (or the persistence of either) is particularly outstanding. Be
that as it may, investors have certainly taken a more positive view on
Switzerland's Lonza (OTCPK:LZAGY)
over the past 18 months as the company has digested its Arch Chemicals
acquisition and a new CEO who appears more focused on margins and
returns than growth for the sake of growth.
On one hand, I do like
Lonza's capabilities in small molecules, peptides, and monoclonal
antibodies. On the other hand, recent contract wins by Samsung Biologics
highlight that there is no particular shortage of competition in
pharma/biotech contract manufacturing. Even if I give the company a
higher multiple than specialty chemical/materials companies typically
get, nothing in the valuation suggests a substantially undervalued
stock.
Follow this link to continue:
After A Big Rally, What Propels Lonza Now?
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