Thursday, December 12, 2013

Seeking Alpha: After A Big Rally, What Propels Lonza Now?

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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