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Lonza (LZAGY)
OTHER OTC:LZAGY
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Lonza Group
(OTC:LZAGY)
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Rating:69Neutral
Price Target:
$76.00
▲(13.18% Upside)
Lonza Group's overall stock score is driven by strong earnings call results and solid financial performance, despite valuation concerns and mixed technical indicators. The company's strategic focus and upgraded guidance provide a positive outlook, but high P/E ratio and cash flow challenges are notable risks.
Positive Factors
CDMO Business Growth
The strong growth in the CDMO business indicates robust demand for Lonza's services, enhancing its market position and supporting long-term revenue growth.
Integrated Biologics Expansion
Significant sales growth in Integrated Biologics highlights Lonza's competitive edge in biologics manufacturing, a key growth area in the life sciences sector.
Advanced Synthesis Margin Improvement
Improved margins in Advanced Synthesis reflect operational efficiency and cost management, contributing to sustainable profitability.
Negative Factors
Inconsistent Revenue Growth
Inconsistent revenue growth may hinder Lonza's ability to predict future earnings, impacting strategic planning and investor confidence.
Negative Free Cash Flow
Negative free cash flow limits Lonza's ability to reinvest in growth opportunities and may necessitate external financing, increasing financial risk.
Increasing Liabilities
Rising liabilities could strain Lonza's financial stability, affecting its capacity to manage debt and invest in future growth.
Lonza Group (LZAGY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$46.21B
Dividend Yield0.63%
Average Volume (3M)5.62K
Price to Earnings (P/E)55.2
Beta (1Y)0.75
Revenue Growth8.41%
EPS Growth33.09%
CountryUS
Employees17,995
SectorHealthcare
Sector Strength45
IndustryMedical - Diagnostics & Research
Share Statistics
EPS (TTM)0.95
Shares Outstanding702,290,200
10 Day Avg. Volume0
30 Day Avg. Volume5,617
Financial Highlights & Ratios
PEG Ratio264.66
Price to Book (P/B)4.06
Price to Sales (P/S)5.77
P/FCF Ratio-265.11
Enterprise Value/Market Cap1.18
Enterprise Value/Revenue7.69
Enterprise Value/Gross Profit23.35
Enterprise Value/Ebitda31.69
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)2.06
Revenue Forecast (FY)$9.47B
Lonza Group Business Overview & Revenue Model
Company DescriptionLonza Group is a global leader in the life sciences sector, providing comprehensive solutions to the pharmaceutical, biotechnology, and specialty chemicals industries. The company operates through two main segments: Pharma & Biotech and Specialty Ingredients. Lonza offers a wide range of products and services, including custom manufacturing of active pharmaceutical ingredients (APIs), cell and gene therapy development, and biologics production, alongside specialty chemicals for various applications, such as personal care and nutrition.
How the Company Makes MoneyLonza generates revenue primarily through its contract development and manufacturing services (CDMO) for the pharmaceutical and biotech industries, which includes the production of APIs and biologics. The company also earns significant income from its Specialty Ingredients segment, which provides specialty chemicals and formulations for health and nutrition, personal care, and agriculture. Key revenue streams include long-term contracts with pharmaceutical companies for custom manufacturing and development services, as well as sales of specialty chemical products. Additionally, strategic partnerships with biotech firms enhance Lonza's market position and capabilities, contributing to stable and growing revenue streams.
Lonza Group Earnings Call Summary
Earnings Call Date:Jul 23, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Jan 28, 2026
Earnings Call Sentiment Positive
The earnings call highlighted strong sales growth and performance in key business segments like Integrated Biologics and Advanced Synthesis, along with an upgraded outlook for the CDMO business. However, challenges such as currency headwinds, sales decline in specialized modalities, and ongoing integration efforts in Vacaville were noted. Despite some lowlights, the strong financial performance and positive outlook suggest a generally favorable business environment.Q2-2025 Updates
Positive Updates
Strong H1 Sales Growth
Lonza reported CHF 3.6 billion in sales across the group, with a 19% constant exchange rate (CER) sales growth compared to 2024.
CDMO Business Performance
The CDMO business excluding CHI saw 23.1% sales growth, leading to a core EBITDA margin slightly above 30%.
Upgraded CDMO Outlook
The company raised its guidance with an upgraded CDMO outlook for full year 2025 of 20% to 21% CER sales growth and a core EBITDA margin of 30% to 31%.
Integrated Biologics Growth
Integrated Biologics reported almost 40% CER sales growth compared to H1 2024, with a core EBITDA margin increase to 36%.
Advanced Synthesis Margin Improvement
Advanced synthesis reported a core EBITDA margin of 40.3%, a 6.9 percentage point increase versus H1 2024.
Capsules and Health Ingredients Recovery
Capsules and Health Ingredients showed flat sales growth versus H1 2024, with a core EBITDA margin increase to 26.2%.
Negative Updates
Currency Impact on Sales
Group sales in H1 were affected by a negative 2% currency headwind due to the Swiss franc appreciation against the U.S. dollar.
Specialized Modalities Sales Decline
Specialized modalities reported a CER sales decline of 9.2% and a core EBITDA margin decrease to 17.3%, impacted by pipeline variability and operational challenges in cell and gene therapy.
Higher Corporate Costs
Higher corporate costs due to FX hedging, increased social security, and insurance contributions impacted margins.
Vacaville Margin Neutrality
Vacaville margins are expected to become neutral to the group towards the end of the next 3 to 4 years, implying ongoing integration and portfolio shift challenges.
Company Guidance
During the Half Year Results 2025 Investor and Analyst Conference Call, Lonza provided an optimistic outlook for the remainder of the fiscal year, driven by a robust performance in the first half. The company reported CHF 3.6 billion in sales, marking a 19% constant exchange rate (CER) sales growth compared to 2024, and a core EBITDA of CHF 1.1 billion with a margin of 29.6%. The CDMO business saw a 23.1% sales increase, leading to a core EBITDA margin exceeding 30%. As a result, Lonza upgraded its full-year 2025 guidance, forecasting a 20% to 21% CER sales growth and a core EBITDA margin of 30% to 31%. The company emphasized its strategic focus on its three new CDMO business platforms: integrated biologics, advanced synthesis, and specialized modalities, alongside the Capsules and Health Ingredients (CHI) segment, which is on track for a planned exit. Despite macroeconomic and geopolitical uncertainties, Lonza remains confident in its ability to continue delivering strong results, attributing its success to disciplined cost management, high asset utilization, and strategic investments across its business platforms.Lonza Group Financial Statement Overview
Summary
Lonza Group's financial performance is mixed. While profitability and operational efficiency are strong, inconsistent revenue growth and negative free cash flow due to high capital expenditures are concerns. The balance sheet is stable, but increasing liabilities could pose future risks.Income Statement
Lonza Group's income statement reflects stable revenue with a slight decline from the previous year. The gross profit margin and net profit margin are healthy, indicating good profitability. However, the revenue growth rate has been inconsistent, with a recent decrease. The EBIT and EBITDA margins show strong operational efficiency, but the net income has declined from its peak in 2021, suggesting some challenges in maintaining profitability growth.75
Positive
Balance Sheet
The balance sheet is robust, with a solid equity base and a moderate debt-to-equity ratio, ensuring financial stability. Return on Equity (ROE) is positive but has declined, pointing to decreased efficiency in generating profits from shareholders' equity. The equity ratio is strong, indicating a healthy proportion of assets financed by shareholders' equity. However, the increase in total liabilities over time is a concern that needs monitoring.70
Positive
Cash Flow
Lonza Group's cash flow situation shows mixed results. Operating cash flow remains strong, although free cash flow is negative, primarily due to significant capital expenditures. The operating cash flow to net income ratio suggests effective cash generation from operations, but the negative free cash flow to net income ratio highlights challenges in covering capital expenditures from operating activities.65
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 7.09B | 6.57B | 6.72B | 6.22B | 5.41B | 4.51B |
| Gross Profit | 2.34B | 2.16B | 1.95B | 2.30B | 1.97B | 1.71B |
| EBITDA | 1.72B | 1.54B | 1.53B | 1.98B | 1.31B | 1.42B |
| Net Income | 733.00M | 636.00M | 654.00M | 1.22B | 2.94B | 869.00M |
Balance Sheet | ||||||
| Total Assets | 18.80B | 19.73B | 16.85B | 17.56B | 16.69B | 14.63B |
| Cash, Cash Equivalents and Short-Term Investments | 907.00M | 1.71B | 1.67B | 2.22B | 3.18B | 495.00M |
| Total Debt | 4.61B | 5.12B | 3.13B | 2.59B | 2.75B | 3.81B |
| Total Liabilities | 10.13B | 10.35B | 7.34B | 6.89B | 6.87B | 7.74B |
| Stockholders Equity | 8.62B | 9.33B | 9.45B | 10.60B | 9.75B | 6.82B |
Cash Flow | ||||||
| Free Cash Flow | -320.00M | -143.00M | -263.00M | -833.00M | -126.00M | 163.00M |
| Operating Cash Flow | 1.15B | 1.27B | 1.39B | 1.04B | 1.22B | 1.14B |
| Investing Cash Flow | -1.97B | -2.92B | -1.10B | -991.00M | 1.02B | -1.09B |
| Financing Cash Flow | 343.00M | 1.28B | -152.00M | -286.00M | -1.28B | 93.00M |
Lonza Group Technical Analysis
Neutral
67.15
Price Trends
67.97
Negative
68.42
Negative
68.08
Negative
Market Momentum
-0.31
Negative
52.12
Neutral
97.72
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LZAGY, the sentiment is Neutral. The current price of 67.15 is below the 20-day moving average (MA) of 67.18, below the 50-day MA of 67.97, and below the 200-day MA of 68.08, indicating a neutral trend. The MACD of -0.31 indicates Negative momentum. The RSI at 52.12 is Neutral, neither overbought nor oversold. The STOCH value of 97.72 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for LZAGY.
Lonza Group Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $163.50B | 47.64 | 6.84% | 0.53% | 2.22% | -7.60% | |
73 Outperform | $39.15B | 30.25 | 20.62% | 0.72% | 6.73% | 3.34% | |
73 Outperform | $38.49B | 31.03 | 19.55% | ― | 3.85% | -4.74% | |
72 Outperform | $217.58B | 33.46 | 13.14% | 0.30% | 3.22% | 8.26% | |
69 Neutral | $46.21B | 55.22 | 7.97% | 0.63% | 8.41% | 33.09% | |
64 Neutral | $28.95B | 35.34 | ― | ― | 4.77% | 7.93% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
LZAGY
Lonza Group
67.57
8.70
14.78%
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TMO
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.