Company Reports

Carl Zeiss Meditec is one of the largest medical technology companies in the world and it operates in two segments: ophthalmic devices, or OPT, and microsurgery, or MCS.

Narrow-moat Carl Zeiss reported first-quarter earnings that came in slightly weaker than our expectations. Total sales of EUR 475 million were up 1% year over year as weak ophthalmology revenue was offset by strong microsurgery performance. After reviewing our near-term assumptions, we slightly trim our fair value estimate to EUR 82 from EUR 84.

Carl Zeiss Meditec is one of the largest medical technology companies in the world and it operates in two segments: ophthalmic devices, or OPT, and microsurgery, or MCS.

Narrow-moat Carl Zeiss announced today that it has agreed to acquire Dutch Ophthalmic Research Center, or DORC, for roughly EUR 985 million. DORC is a supplier of ophthalmic instruments and equipment and specializes in vitreo-retinal surgery. The deal is expected to close in the first half of 2024 and given that the surgical ophthalmology market is a fragmented space with Zeiss shares lagging larger players like Alcon and Bausch + Lomb, we don’t think the firm will face serious regulatory or antitrust issues. We maintain our fair value estimate of EUR 84 per share.

Narrow-moat Carl Zeiss reported fourth-quarter earnings slightly below our expectations. Total sales were up 1.7% year over year as strong performance from microsurgery segment offset weak ophthalmology results. After rolling our model and accounting for near-term pressures, we lowered our fair value estimate to EUR 84 from EUR 87 per share.

Carl Zeiss Meditec is one of the largest medical technology companies in the world and it operates in two segments: ophthalmic devices, or OPT, and microsurgery, or MCS.

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.

Carl Zeiss Meditec is one of the largest medical technology companies in the world and it operates in two segments: ophthalmic devices and microsurgery.

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.

After reviewing our key valuation assumptions, we are raising our fair value estimate for Carl Zeiss Meditec to EUR 90 from EUR 76, driven by our updated outlook of its long-term potentials, combined with a higher level of appreciation for the company’s cash balance. Zeiss is one of the largest medical technology companies in the world and it operates in two segments: ophthalmic devices and microsurgery.

Carl Zeiss Meditec is one of the largest medical technology companies in the world and it operates in two segments: ophthalmic devices and microsurgery.

Carl Zeiss Meditec, a subsidiary of optical conglomerate Zeiss Group, is a major supplier of surgical microscopes, diagnostic equipment, refractive lasers, and cataract equipment and lenses. The company has an especially strong position in microsurgery, where the market is effectively a duopoly between Zeiss and Danaher’s Leica Microsystems. Zeiss has an approximate 50% share of scopes for neurosurgery, spinal, plastic, and dental and a two thirds share in ophthalmic scopes for eye surgery. The company has been making a push to increase recurring revenue sales, which primarily include consumable treatment packs for laser vision correction and technical service on equipment.

Narrow-moat Carl Zeiss posted mixed fiscal first-quarter results with strong sales but weak margins. Adjusted revenue grew by 12% year over year, but operating margins fell substantially. Nonetheless, we think the overall picture looks positive for the firm. Currency-adjusted sales growth was better than anticipated and looks to be on track to rebound more closely with the firm's peers. Meanwhile, operating margins appear uncharacteristically low in part from temporary headwinds. Considering sturdy top-line gains against brief margin headwinds, we expect to raise our fair value estimate.

Narrow-moat Carl Zeiss ended its fiscal year with mixed results. Despite strong top-line growth of 15%, operating margins fell slightly. While other medical device manufacturers look primed to rebound after short-term macro headwinds pass, Zeiss seems to have some wind at its back already and less of a runway. We maintain our fair value estimate of EUR 69 per share.

Carl Zeiss Meditec, a subsidiary of optical conglomerate Zeiss Group, is a major supplier of surgical microscopes, diagnostic equipment, refractive lasers, and cataract equipment and lenses. The company has an especially strong position in microsurgery, where the market is effectively a duopoly between Zeiss and Danaher’s Leica Microsystems. Zeiss has an approximate 50% share of scopes for neurosurgery, spinal, plastic, and dental and a two thirds share in ophthalmic scopes for eye surgery. The company has been making a push to increase recurring revenue sales, which primarily include consumable treatment packs for laser vision correction and technical service on equipment.

Carl Zeiss Meditec, a subsidiary of optical conglomerate Zeiss Group, is a major supplier of surgical microscopes, diagnostic equipment, refractive lasers, and cataract equipment and lenses. The company has an especially strong position in microsurgery, where the market is effectively a duopoly between Zeiss and Danaher’s Leica Microsystems. Zeiss has an approximate 50% share of scopes for neurosurgery, spinal, plastic, and dental and a two thirds share in ophthalmic scopes for eye surgery. The company has been making a push to increase recurring revenue sales, which primarily include consumable treatment packs for laser vision correction and technical service on equipment.

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.

Narrow-moat Carl Zeiss Meditec reported about as-expected fiscal second-quarter results with 10.7% currency-adjusted sales growth and roughly flat year-over-year adjusted operating margin. We maintain our EUR 69 fair value estimate; shares remain overvalued.

Narrow-moat Carl Zeiss Meditec had a decent start to the fiscal year with robust 10.5% currency-adjusted sales growth, though operating margin faced headwinds from supply chain constraints and planned higher research and marketing costs. We intend to raise our fair value estimate by a mid-single-digit percentage after incorporating a long-term U.S. corporate tax rate of 21% and higher medium-term top-line growth. Despite a 30% decline in recent months, shares remain overvalued in our view and trade about 2 times above our fair value estimate.

Narrow-moat Carl Zeiss Meditec reported fiscal fourth-quarter and year-end earnings with few surprises and results largely met our expectations. We are increasing our fair value estimate to EUR 69 per share from EUR 64 after adjusting our expectations around operating margin, which we now believe will sustainably settle above 20% in the medium term. Shares remain quite overvalued, in our view.