Carl Zeiss Earnings: Improving Conditions Fuel Sales, but Weak Consumables Pose Margin Pressure

Narrow-moat Carl Zeiss reported third-quarter results that were ahead of our expectations, with total sales up 12.1% year over year. Improving supply conditions and ramped up production helped meet healthy demand across all regions and fueled strong top-line growth. However, operating margin so far for the year continues to lag due to poor product mix and high spending. After accounting for our updated near-term outlook, we lower our fair value estimate to EUR 87 from EUR 90.