Carl Zeiss' Costs Creep Up to More Normal Levels in Third Quarter; Shares Remain Overvalued

There were few surprises in narrow-moat Carl Zeiss Meditec's fiscal third-quarter results. While sales growth was strong in ophthalmic devices and microsurgery (11% in both segments), operating margins came down slightly as sales, marketing, and research spending returned to a more normal level. We had already expected some margin compression from higher operating costs, and there is no change to our EUR 69 fair value estimate. The shares remain materially overvalued, in our opinion.