Profit warning speculation – expert classifies: Is Lonza experiencing corona blues?

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People from 70 countries work in the small town of Visp VS – and all because of Lonza. The drug supplier gave Valais a real boom. The group was successful during the corona epidemic: because it provided an important base material for the corona vaccine. Since then, the enthusiasm surrounding the group has waned somewhat. So far, things have not gone badly for the supplier. However, rumors are currently circulating that Lonza may issue a snow warning soon. What’s behind it?

“Lonza has already indicated that demand from small biotechs is falling,” explains Michael Kunz (51), equity analyst at Luzerner Kantonalbank (LUKB). But there is demand from big pharmaceutical companies. “As such, I don’t see any harsh signs that speak for a snow warning.” Still, he makes it clear: “Lonza is definitely not overrun with investigations at the moment.”

The Insideparadeplatz.ch portal sees things a little harder: One article says that production facilities are “clearly underutilized”. It’s unclear where the speculation came from.

Suppliers do not give much information

According to stock analyst Kunz, the decline in demand from biotech companies in the US is already being felt. However, it is unknown to what extent Lonza is suffering from weak demand. “Suppliers don’t let out who they’re doing for.” With the Corona vaccine, this was more of an exception. “But Lonza certainly has a large client base made up of big pharmaceutical companies,” says the analyst.

Speculation about the profit alert rattled the drug supplier’s share price Tuesday morning. Meanwhile, this has dropped to 1.9 percent. In the afternoon, however, the price calmed down and stabilized at around 530 francs per share. Last month, the price dropped almost 12 percent. The share nevertheless showed a positive development since the beginning of the year.

Lonza hopeful for the second half of the year

Lonza stock is still one of the favorites in the Luzerner Kantonalbank. “As a major pharmaceutical supplier, Lonza is better able to meet quality requirements than smaller niche suppliers,” says Kunz. The curve always points up, even if the stock price fluctuates.

At the beginning of May, Lonza reported business developments in the first quarter. There, the drug supplier confirmed its 2023 outlook. A stronger second half should make up for the weaker first half. The company expects high single-digit sales growth.

Source :Blick