Straumann Earnings: Strong International Performance, but Weak US Market Signals a Tough Year-End

Narrow-moat Straumann reported third-quarter earnings that came in slightly below our expectations. Total sales of CHF 586 million were up 2.6% year over year, or 7.7% after accounting for the DrSmile divestiture, but behind our estimate of CHF 605 million. Straumann delivered growth across the portfolio and gained shares in both premium and value implants. The firm didn’t take any major pricing actions in developed markets like Europe, so we surmise that most of the growth was driven from volume. After the Oct. 29 results, nine months of the year delivered about 15% organic growth, but Straumann maintained its guidance of low-double-digit growth for the year, which implies a slowdown in the fourth quarter. After adjusting our model, we maintain our fair value estimate of CHF 112 per share, as our new estimates were offset by time value of money.