Carl Zeiss Earnings: Encouraging Results From Recovery Green Shoots and Product Launches

Narrow-moat Carl Zeiss Meditec reported solid second-quarter earnings with results above our expectations. Total revenue of EUR 560 million was up 18.6% year over year, or up 7.3% excluding DORC acquisition and currency impacts, as broad-based growth across segments helped drive positive results. Equipment remains slightly below last year, but we see this simply due to the timing of new Kinevo 900 and Visumax 800 launches rather than to commercial missteps. Visumax 800 launched on March 1, and similar to the Kinevo turnaround we think the second half should illustrate a clearer picture of commercial demand, which we expect to be healthy, for the new product. We still expect the second half of fiscal 2025 to see a solid ramp up in segment sales as the new product rolls out. We maintain our fair value estimate of EUR 73 per share and see a modest upside to the name even after May 13’s mid-single-digit rally.