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MarketScreener Homepage  >  Equities  >  Swiss Exchange  >  Bachem Holding AG    BANB   CH0012530207

BACHEM HOLDING AG

(BANB)
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Bachem Holding AG: World leader in peptides

07/23/2020 | 09:32am EST

Headquartered in Switzerland with operations in Europe, the U.S. and Asia, Bachem provides a full range of services to the pharmaceutical industry since 1971.

 

The company specializes in the development of medicines manufacturing processes through the reliable production of peptide-based active ingredients for research labs. A comprehensive catalog of biochemicals and exclusive syntheses complete its portfolio.

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Peptides are chains amino acids used as active and highly specific drug substances. Oncology, diabetes and obesity are three prominent examples of therapeutic areas in which peptides generate billions of dollars in revenues. They're also in high demand in the treatment of cardio-vascular and neurodegenerative diseases, renal failure, as well as antibiotics, vaccines and drugs for rare diseases.

Bachem supplies pharmaceutical companies (51% of revenue) and biotechs (39%) for the most part, with universities, diagnostics and cosmetics manufacturers accounting for the remaining of business. Customers value regulatory expertise, reliability, speed and availability, for each development entails a myriad of complex undertakings, trials and experimentations under strict guidelines.

With a catalog of 5,500 products in stock that can be delivered in one or two days, Bachem is ideally positioned to satisfy the most demanding customers for a wide range of applications. Coupled with an established reputation, this superb supply chain cements the company's dominance in peptides and its competitive advantage across the industry.

Last year proved eventful, as Bachem successfully expanded its portfolio, adding new capacities in the area of oligonucleotides — which are short DNA or RNA molecules used in genetic testing, research, and forensics. Demand for oligonucleotides is poised to stay greater than existing supply, so Bachem had a lightning start into this market segment.

This new business explains much of the record sales growth in North America (+37%). With a pipeline of 150 NCE ("New Chemical Entities") research projects (vs. 70 five years ago) and significant expansion opportunities in antimicrobial peptides — to combat resistance of bacterial strains against classical antibiotics — that trend looks built to last, albeit not necessarily in such epic proportions.

Still, the board of directors and executive committee both expect to break through the CHF 500 million sales barrier over the next four to five years. Should that happen, all else being equal, Bachem could earn CHF 6 per share in 2023 or 2024 — implying already hefty valuation levels of about x47 forward EPS at current share price of CHF 280.   

Importantly, per latest annual report, "priority will continue to be given to profit growth over sales growth". The latter comment underscores prudent management — a hallmark that has stamped Bachem for decades  — characterized among others by strict cost control, thoughtful and self-funded expansion and little appetite for acquisitions, despite the fragmented industry.

Hence the fortress balance sheet, with trivial amounts of long-term debt and CHF 200 million in total liabilities against CHF 331 million in current assets alone. On the financing front, the company carried out a small capital increase last year, issuing 400,000 new shares at an issue price of CHF 120 each. Of note was the full participation of founder and major shareholder Dr. Peter Grogg.

The sum of these merits lead Bachem to rank high on MarketScreener's quantitative ratings, notwithstanding its already generous valuation. In effect, at about x66 forward earnings and x41 EBITDA — on an enterprise value basis — investors jumping in at this price may leave themselves no room for mistake.

Regardless, a setback in price action may offer a great entry point to momentum-driven traders.


© MarketScreener.com 2020
All news about BACHEM HOLDING AG
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09/29BACHEM : Contract manufacturer PolyPeptide prepares for 2021 Zurich listing -sou..
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08/18BACHEM HOLDING AG : half-yearly earnings release
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05/11BACHEM : and Jitsubo enter into exclusive Licensing Agreement
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04/24BACHEM HOLDING AG : Ex-dividend day for
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04/24BACHEM HOLDING AG : Ex-dividend day for final dividend
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03/10BACHEM HOLDING AG : annual earnings release
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Key data
Capitalization (CHF)
4 981 063 000
Capitalization (USD)
5 493 859 881
Net sales (CHF)
313 715 000
Net sales (USD)
346 335 086
Number of employees
1 356
Sales / Employee (CHF)
231 353
Sales / Employee (USD)
255 409
Free-Float
43,5%
Free-Float capitalization (CHF)
2 164 626 241
Free-Float capitalization (USD)
2 387 472 967
Avg. Exchange 20 sessions (CHF)
6 761 864
Avg. Exchange 20 sessions (USD)
7 464 963
Average Daily Capital Traded
0,14%
Income Statement Evolution
EPS & Dividend
EPS Revisions
Revenue Revisions
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 4
Average target price 431,67 CHF
Last Close Price 356,00 CHF
Spread / Highest target 40,4%
Spread / Average Target 21,3%
Spread / Lowest Target 11,0%
Consensus revision (last 18 months)