Company Reports

We are initiating coverage on Stevanato, a manufacturer of glass drug packaging and injection devices, including vials, prefilled syringes and cartridges, as well as injection pens and autoinjectors. The company benefits from the overall rise in biologics, as well as peptides and GLP-1 drugs.

Stevanato is a leading provider of glass and polymer drug containment and delivery solutions, serving the pharmaceutical, biotechnology, and life sciences industries. Alongside its core packaging business, it operates an engineering segment that designs and manufactures advanced machinery for pharmaceutical manufacturing.

We are dropping coverage of Stevanato. We provide broad coverage of more than 1,500 companies globally and periodically adjust our coverage according to investor interest and staffing.

Stevanato’s solid second-quarter results gave us increased confidence in our long-term expectations as the narrow-moat firm was able to overcome lower COVID-19 demand to report growth at the upper end of our forecasts. However, this was offset by higher operating costs and a higher share count in our model, and we are leaving our $19.40 fair value estimate intact.

Narrow-moat Stevanato had an overall good quarter, and while top-line growth came in a tad below our forecast, this was offset by operating margin above our expectations. Though there is little change to our fundamental view, we are decreasing our fair value estimate to $19.40 from $21.50 to account for the changing euro-united states dollar exchange rate, and we have also slightly decreased our growth forecast for next year. Shares are still moderately undervalued, in our view.

Stevanato is the market leader in pen cartridges and presterilized vials and holds the number position in prefillable syringes (behind Becton Dickinson). The company is a key supplier in the drug delivery supply chain, and provides drug containment and primary packaging solutions to 41 of the top 50 global pharma companies. Primary packaging is the material that first envelops a drug product, and safe production of drug-delivery packaging is critical for the successful delivery of pharmaceutical products.

Narrow-moat Stevanato had a nice finish to 2021, exceeding both our forecasts and company guidance, and our view of an accelerated shift toward high-value solutions appears to be playing out. We maintain our $21.50 fair value estimate; shares look moderately undervalued.

We are initiating coverage of Italian drug containment and delivery supplier Stevanato with a $21.50 fair value estimate, a narrow moat rating, and a Standard capital allocation rating. While shares have been volatile since the firm’s IPO in July 2021, with the stock down 35% from highs reached in September, we view shares as fairly priced near recent levels.

Stevanato is the market leader in pen cartridges and presterilized vials and holds the number position in prefillable syringes (behind Becton Dickinson). The company is a key supplier in the drug delivery supply chain, and provides drug containment and primary packaging solutions to 41 of the top 50 global pharma companies. Primary packaging is the material that first envelops a drug product, and safe production of drug-delivery packaging is critical for the successful delivery of pharmaceutical products.