Carl Zeiss Earnings: Strong Top Line but Poor Product Mix and Pricing Pressure Lead to Mixed Results

Narrow-moat Carl Zeiss Meditec reported second-quarter earnings that were in line with our expectations. Total sales were up 13.3% year over year driven by double-digit growth in ophthalmology, or OPT, and microsurgery, or MCS. We expect near-term challenges, including supply chain disruptions, inflationary pressures, and an unfavorable product mix, to persist throughout the year. We maintain our fair value estimate of $90 per share after slightly subdued second-half of 2023 projections were offset by time value of money.