Lonza Shares Drop After Warning of 2024 Profitability Shortfall
By Adria Calatayud
Shares of Lonza Group fell sharply after the company issued new 2024 guidance that fell short of consensus expectations and warned of a hit from Moderna's decision to ramp down substance production for its Covid-19 vaccine.
At 0743 GMT on Tuesday, shares in the Swiss life-sciences company dropped 9.1% to CHF387.20, taking their fall over the last three months to 28%.
Lonza said it expects its core earnings before interest, taxes, depreciation and amortization margin for next year to be in the high twenties percentage range, against expectations of 30.7%, according to a company-provided consensus.
The company attributed its 2024 profitability outlook to an expected loss of revenue from Moderna, the comparison effect of a termination fee following Moderna's move to adjust production of its Covid-19 vaccine in response to lower demand and risk of a smaller business with Kodiak Sciences.
The company expects 2023 sales growth at constant currency to be at the higher end of its previous guidance, which called for growth in the mid-to-high single-digit percentage range, and core Ebitda margin topping its prior expectation of 28% to 29%.
Lonza's new outlook is negative for sentiment, RBC Capital Markets analyst Charles Weston wrote in a note to clients. While the company's 2023 should be strong, this is mainly driven by a fee relating to the termination of its long-term agreement with Moderna, which is a significant contract loss, Weston said.
Lonza is the latest life-sciences company to issue cautious outlook comments as the pharmaceutical industry looks past the pandemic-era surge in demand that boosted many of its suppliers. Pfizer on Friday lowered its guidance for the year due to changes in expected sales of its Covid-19 vaccine and treatment Paxlovid, a day after German laboratory-equipment supplier Sartorius cut its own guidance, citing a slow recovery in demand.
The Swiss company is navigating a weaker market while it looks for a permanent chief executive, after Lonza said last month Pierre-Alain Ruffieux would step down from the role by mutual agreement.
Write to Adria Calatayud at adria.calatayud@dowjones.com
(END) Dow Jones Newswires
October 17, 2023 04:12 ET (08:12 GMT)
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