Is SCHOTT Pharma Still a Buy After Earnings Disappointment?

The pharmaceutical packaging and delivery sector has long been a haven for investors seeking stable growth, but recent developments at SCHOTT Pharma have cast a shadow over its once-bright trajectory. After a string of strong results in 2025, the company's revised guidance for 2026 and a wave of analyst downgrades have sparked a critical question: Is SCHOTT Pharma still a compelling investment, or has the market's optimism been derailed by structural headwinds?

Earnings Performance: A Tale of Two Segments

SCHOTT Pharma's 2025 results were a mixed bag. For the full year, the company delivered revenue of €986.2 million, reflecting 5.8% growth at constant currencies, with an EBITDA margin of 28.4%-a 1.5 percentage point improvement from 2024 according to the company's earnings report. This outperformance was driven by its Drug Containment Solutions (DCS) segment, which saw revenue rise 11.9% to €548 million, fueled by demand for sterile ready-to-use (RTU) cartridges and specialty vials. High-value solutions (HVS), which now account for 57% of total revenue, underscored the company's shift toward premium offerings.

However, the Drug Delivery Systems (DDS) segment, which includes polymer syringes and auto-injectors, posted a 1.3% revenue decline at constant currencies. This weakness was attributed to reduced demand from a key customer and ramp-up costs for new facilities in Serbia and Hungary. While the DCS segment's strength offset some of these challenges, the broader message was clear: SCHOTT Pharma's growth is becoming increasingly lopsided.

Guidance Revisions and Analyst Reactions

The real trouble emerged in the company's 2026 outlook. SCHOTT Pharma now expects revenue growth of 2-5% at constant currencies and an EBITDA margin of around 27%, down from the 28.4% achieved in 2025. This guidance fell well below analyst expectations, which had previously projected 8.7% revenue growth and a 28.8% margin according to market data. The disconnect triggered a wave of downgrades. Deutsche Bank cut its rating to "hold" from "buy" and slashed its price target to €19 from €29, citing weaker guidance and revised medium-term targets. UBS and RBC also revised their estimates downward, with UBS's Olivier Calvet reducing sales and EBITDA forecasts for 2026-2028 by 11% and 16%, respectively according to market analysis.

The revised guidance reflects a combination of macroeconomic uncertainty and sector-specific challenges. SCHOTT Pharma's CEO, Andreas Reisse, acknowledged that increased global policy discussions and macroeconomic uncertainty had dampened industry sentiment. More concretely, the company cited a revised market outlook from a key customer in the DDS segment, a factor that could persist into 2026.

Long-Term Risks and Strategic Shifts

While SCHOTT Pharma's long-term investments-such as a €100 million expansion in Hungary for RTU cartridges and sustainability initiatives targeting Scope 3 emissions-remain promising, they also highlight the company's reliance on capital-intensive growth. The shift to green manufacturing, including an electric melting tank powered by 100% renewable energy, is a strategic move to align with ESG trends according to the company's Q3 report. However, these projects require time to yield returns, and the DDS segment's near-term struggles suggest that diversification remains a work in progress.

The broader industry context is equally concerning. The rise of biosimilars and the shift toward oral therapies for chronic conditions like diabetes and obesity could erode demand for traditional drug delivery systems. SCHOTT Pharma's pivot to high-margin sterile solutions is a step in the right direction, but it cannot fully insulate the company from macroeconomic volatility or customer concentration risks.

Conclusion: A Buy? Or a Cautionary Tale?

SCHOTT Pharma's 2025 results demonstrated resilience, particularly in its DCS segment. Yet the 2026 guidance and analyst downgrades signal a recalibration of expectations. For investors, the key question is whether the company's long-term growth story-anchored in high-value solutions and sustainability-can offset near-term headwinds.

The answer hinges on execution. If SCHOTT Pharma can stabilize its DDS segment, accelerate adoption of HVS, and deliver on its capital expenditures without overextending, the stock may still offer value. However, the current valuation, coupled with a more conservative growth outlook, suggests that patience-and a closer watch on customer dynamics-is warranted. For now, the "buy" label is on hold.