Sartorius AG Shares Rebound Amid Lower Earnings Expectations and Subdued Market Confidence

Sartorius AG's stock recovered slightly after a significant fall, remaining the weakest DAX stock in 2024 with a 30% decline. Analyst Richard Vosser from JPMorgan updated his estimates, predicting lower operating results and a lower forecast for subsidiary Sartorius Stedim Biotech. Despite this, Sartorius's outlook from the recent Capital Markets Day remains unchanged, with an expected reduction in annual targets. The company's growth forecast for 2024 is now expected to be stable or slightly higher.

Introduction:
Sartorius AG (SART), a leading laboratory equipment and biopharmaceutical supplier, experienced a slight recovery in its stock price after a significant decline in 2024. Despite this, SART remains the weakest DAX stock, with a 30% decrease. Analysts at JPMorgan, however, remain optimistic about the company's outlook, predicting mid to high single-digit revenue growth and improved order situations for the Bioprocess Solutions (BPS) segment in the fourth quarter of 2023 (1).

Analyst Expectations:
JPMorgan analyst Richard Vosser has maintained an "Overweight" rating on SART and set a price target of €315. Despite anticipating lower growth in the bioprocessing market, Vosser expects SART to achieve mid to high single-digit revenue growth in 2024. Furthermore, he predicts an adjusted EBITDA margin of slightly over 30% for the company (1).

BPS Segment Performance:
The BPS segment, which accounts for a significant portion of SART's revenue, is expected to perform well, with a margin expansion to slightly above 31% (1). Vosser also anticipates an improved order situation in the fourth quarter of 2023, which could provide a positive surprise (1).

Solid Fourth Quarter Figures:
Vosser expects solid figures for the fourth quarter, with slightly above average EBITDA for both SART and its subsidiary Stedim (1). Additionally, he predicts revenue growth in the mid-single-digit percentage range for SART at constant exchange rates (1).

Cautious Forecasts for Stedim:
Vosser's forecasts for Stedim, SART's subsidiary, are slightly more cautious, with revenue and adjusted earnings forecasts expected to be about four percent below Bloomberg's consensus value (1).

Conclusion:
Despite the market uncertainties and lower growth expectations in the bioprocessing market, JPMorgan analysts remain optimistic about SART's outlook. With mid to high single-digit revenue growth, improved order situations, and solid fourth-quarter figures expected, SART's stock is expected to develop positively in the coming months.

References:
1. https://eulerpool.com/en/news/pharma/sartorius-forecasts-support-positive-outlook